Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

Oral Answers to Questions — DEFENCE

Catering

Mr. Speller: To ask the Secretary of State for Defence what assessment he has made of the standards of catering in the armed forces; and how many complaints he has received on this subject.

The Minister of State for the Armed Forces (Mr. Archie Hamilton): Standards of catering in the armed forces are kept under regular review. I have received no formal complaints on this subject, although I have had the opportunity to discuss catering and other matters relating to the pay and conditions of service personnel during the many visits that I have made to armed forces units in the United Kingdom and overseas.

Mr. Speller: May I inform my hon. Friend that it is most unlikely that he will receive any complaints? Is he aware that the standard of catering in the armed forces is now probably at its highest ever level and that it is certainly the equivalent of or better than that of our friends in NATO? I speak as an ex-catering officer who has lived entirely on that food.

Mr. Hamilton: The armed forces have benefited very much from the services of private catering contractors. I know of my hon. Friend's interest in this. The few complaints that we have received relate to instances where private firms have not met the manpower or the standards that were expected of them when the contracts were originally signed.

Mr. Tony Banks: Is the Minister aware that my uncle was in the catering corps? If people did not eat the salad, he had a habit of frying it, which produced a most peculiar dish to eat. Can the Minister give an undertaking that our troops no longer have to eat fried salad?

Mr. Hamilton: I can only say that I have never been offered fried salad at any of the establishments that I have visited.

European Fighter Aircraft

Mr. Cran: To ask the Secretary of State for Defence what progress is being made towards full development of the European fighter aircraft.

The Secretary of State for Defence (Mr. Tom King): The development of the European fighter aircraft is proceeding

satisfactorily. Work on the first prototype has progressed well, the first full-scale development engine is expected to be run later this year, and more than two thirds of the equipment sub-contracts have now been agreed.

Mr. Cran: Will my right hon. Friend confirm that there is no political impediment to the completion of the European fighter aircraft? I say that against the background of speculation about the attitude of the West German Government. Arising out of my right hon. Friend's dicussions on 21 January with his West German opposite number, Dr. Stoltenberg, is my right hon. Friend in a position to tell the House when he might announce the awarding of the final major contract for the radar system?

Mr. King: I can certainly conform that it is going ahead. I had a useful discussion with Dr. Stoltenberg at the end of January in which we agreed to issue a statement to the effect that we regard the EFA as the best solution to meet the requirements of our air forces in 1990 and beyond. I hope that it will be possible to make an announcement about the radar system shortly.

Mr. Rogers: In view of what is happening in central Europe, does the Minister accept that there may be a change in the initial number of planes ordered? Will he confirm that the project may not be viable if the number falls below 400?

Mr. King: The hon. Gentleman heard my answer. It is the considered view, stated by Dr. Stoltenberg and myself', that the EFA remains the best answer to our needs. The development phase is proceeding. The scale of the production order has yet to be finally determined and we shall take into account the circumstances at the time. We wish to make it absolutely clear, however, that we regard EFA's role in the air defences of this country as an important requirement.

Mr. Mans: Does my right hon. Friend agree that regardless of the political and military developments in Europe, the development of the European fighter aircraft is vital not only for this country's aviation and aerospace industries, but for the aerospace industries in Europe?

Mr. King: It is certainly a significant project in terms of the number of jobs involved, not only in British Aerospace, but in Rolls-Royce and, if the radar is successful, in GEC and Ferranti also. It is an important industrial project, but my first concern is whether it is needed in the defence role. Dr. Stoltenberg and I have agreed that we see a significant role for it as an agile fighter for our air defences in the 1990s.

Germany (British Forces)

Mr. Cartwright: To ask the Secretary of State for Defence what steps he is taking to review the level of British forces stationed in Germany.

Mr. Tom King: As I told the House last month, we are examining options for change as we take account of international developments and progress in arms control negotiations. This work is set against the background of our commitment to provide strong and assured defence of the United Kingdom, and to meet our NATO and out-of-area obligations.

Mr. Cartwright: Does the Secretary of State accept that the requirements of an arms control treaty, the implications of German reunification and the virtual collapse of the Warsaw pact all inevitably lead to the reduction of current levels of British forces stationed in Germany in the foreseeable future? Does not that underline the case for a thorough reassessment of Britain's defence needs in a changing world?

Mr. King: On reflection, the hon. Gentleman will find that most of what he said was contained in my answer. We are looking at options for change against precisely the background of international developments including, of course, the position in Europe and in Germany, developments in the Warsaw pact and what we hope will be the successful completion of the CFE negotiations this year.

Sir Antony Buck: Does my right hon. Friend agree that it is important for us to keep a significant number of forces in Germany, especially as we must see it as encouragement to the Americans not to decouple, and to keep significant numbers of forces in Europe?

Mr. King: There is general agreement and recognition of the importance and value of NATO and of stationed forces, which was re-emphasised by President Bush in his commitment to the American presence in Europe. We believe that it is important to play our part in that, too.

Mr. O'Neill: The Secretary of State has said that the two criteria are international developments and arms control advances. What further international developments does he require than the likely reunification of Germany, the last obstacle to which has been removed today by Chancellor Kohl's cabinet agreement on boundaries? On the CFE first stage agreement, what more does he require before he can talk seriously to NATO and make constructive suggestions about troop cuts in central Europe?

Mr. King: I was glad to hear the hon. Gentleman raise the latter point. I waited with great expectation as I understood that he was about to reaffirm Labour's commitment to a strategy for strong defence and produce an updated statement of Labour's defence policy. I have the statement here. It merely refers to discussions between the Netherlands, Belgium and Britain. I remind the hon. Gentleman that NATO, the United States of America and Germany have a crucial contribution to make to such discussions.

Mr. Dennis Skinner: rose——

Sir Geoffrey Johnson Smith: I wish that the hon. Member for Bolsover (Mr. Skinner) would sit down. I have the Floor. While we all agree that we should look forward to a reduction in armed forces in Germany and elsewhere, does my right hon. Friend the Secretary of State agree that it would be foolish in the extreme to agree to withdraw them until proper verification procedures are in place to ensure that the other side carries out its promises?

Mr. King: The wisdom of what my hon. Friend said is becoming increasingly apparent. I have made it clear that we are looking for options for change, but we shall not rush headlong into anticipating changes before it is clear what the fundamental, irreversible changes may be. The benefits of NATO are manifest and clear. One could make

guesses about what is happening and what the consequences are likely to be, but we do not back guesses—we work on facts and certainties.

Chemical Defence Establishment

Mr. Buckley: To ask the Secretary of State for Defence what is the annual budget of the chemical defence establishment.

Mr. Neubert: Some £20 million.

Mr. Buckley: As the disarmament talks in Geneva are leading to a treaty agreement, what significant plans does the Minister have for phasing down the Porton Down chemical establishment to save expenditure on the defence budget?

Mr. Neubert: I can understand that the hon. Gentleman may not be so well informed as he might be about the subject because he has been put up to ask the question. Perhaps I should first tell him that we are talking about the chemical defence establishment, the need for which is not removed by the developments in arms control negotiations which we fully support and in which we play a major part. The purpose of the establishment is to devise means of protecting our armed forces against chemical weapons. The recent use of chemical weapons in the Iran-Iraq conflict in the Gulf demonstrates that that is not academic.

Mr. Key: Does my hon. Friend agree that the work of my constituents in the chemical defence establishment is of the highest importance, and that its development of the technology for detection of chemical warfare agents and its role in verification make the work of the establishment more important, not less?

Mr. Neubert: My hon. Friend keeps in close contact with Porton Down and is well placed to know the value and excellence of the work done there. He is right to say that any agreement on chemical weapons convention would entail a great need for verification techniques. A great deal of important work is being done by the CDE on those techniques.

Mr. Boyes: In view of the encouraging progress on chemical weapons disarmament at Geneva, the fact that the United States accepts that the strength of the Soviet chemical stocks is down to about 75,000 tonnes, and the likelihood of a war in Europe in which chemical weapons were used being nil, are not there much better ways of spending £20 million than on obscene, unacceptable weapons which the British public do not want?

Mr. Neubert: I am sorry that the ignorance is spreading to the Opposition Front Bench from the Back Benches. It was quite clear from my earlier answer that not only did the establishment have a modest budget, but its purpose was not in any way aggressive or hostile. The establishment is simply to protect our armed service men from attack against chemical weapons. Contrary to what the hon. Gentleman said, there is a recent example of chemical weapons being used in the Gulf. I hope that the hon. Gentleman does not intend that in any future conflict our service men should go into combat unprotected against such weapons.

Mr. Viggers: Is not it a fact that the Warsaw pact not only has chemical weapons but regularly practises their


use? Should not we, therefore, all be urging Warsaw pact forces to reduce weapon stocks and allow inspection? It would then be possible for us to take steps to assist in those measures.

Mr. Neubert: My hon. Friend draws attention to the great stocks of chemical weapons still held by the Soviet Union. We can only welcome the recent developments between the Americans, in the persons of Mr. Baker and Mr. Bush, and the Russians, in the person of Mr. Shevardnadze, towards reducing those weapon stocks. Britain set the example about 30 years ago by renouncing chemical weapons. We have no stocks of such weapons, nor any plans to produce any.

German Unification

Mr. Mullin: To ask the Secretary of State for Defence what recent assessment he has made of the defence implications of the unification of Germany.

Mr. Wilson: To ask the Secretary of State for Defence what recent assessment he has made of the defence implications of the unification of Germany.

Mr. Tom King: We strongly support the Federal German Government's expressed wish that a unified Germany should be a member of the NATO Alliance. Consultations on the security implications of unification will continue within NATO and between the four powers and the two Germanys.

Mr. Mullin: Whence comes the threat requiring us to insist that a united Germany be incorporated in NATO—from Albania?

Mr. King: I am not sure whether the hon. Gentleman has read the important new statement on his party's defence policy, which is accompanied by the statement that
The Labour leadership is anxious to avoid supporters being stampeded into demands for deep cuts in defence".
That is the policy of the Labour spokesmen—they have decided that my right hon. Friend the Prime Minister and other Conservative Members are right. We shall move forward, carefully analysing the options that exist and then decide sensibly, in the light of a more certain forecast, what the opportunities should be.

Mr. Wilson: Is it a matter of satisfaction or of concern to the Government that when the people of East Germany go to the polls in democratic elections in 12 days' time they will do so with short-range nuclear weapons from the West still pointing at them? Is not there a case now for some imagination and leadership in the Government's approach, instead of their being seen, led only by the Prime Minister, as the people who are clinging desperately to the last vestiges of the cold war?

Mr. King: The NATO defensive strategy of flexible response and of forward defence has been a key element in assuring the strength of the West and it will probably see the total collapse of the Warsaw pact. The worst thing that we could do would be to dismantle our defences and strategies at the very moment when the future is unclear.

Sir Jim Spicer: Does my right hon. Friend agree that whatever may happen in terms of the unification of

Germany, the one thing that our armed forces will require in the future is versatility? Is that versatility better provided by the helicopter or the tank?

Mr. King: The other thing that our armed forces need is consistency of support, and on that issue no one could suggest that my hon. Friend has been guilty of any deviation from a clear policy of support for a proper provision of helicopters.

Sir John Stokes: Does my right hon. Friend agree that the economic implications of the unification of Germany are rather more important than the defence ones? Should not British business men be more worried than British generals?

Mr. King: That question goes a little wider than my immediate subject here today, but the implications are substantial. We welcome the unification of Germany—self-determination is a fundamental principle of NATO, for which it has stood for 40 years—but it obviously raises issues that must be addressed. Unification is more likely to be successful and harmonious if we have addressed those issues properly and sensibly.

Mr. Menzies Campbell: Does the Secretary of State accept that a unified Germany and membership of NATO is much more likely to bring stability to central Europe than if a unified Germany adopted a position of neutralism? Having regard to the implications for British forces in Germany, will the right hon. Gentleman undertake that any review such as that which is under consideration will take account of the relationship not only of forces in Europe but of United Kingdom forces generally? In particular, will he have regard to the possibilities of specialisation and the enhanced role that the Royal Navy might be able to play in a settlement in a few years' time?

Mr. King: I am grateful for what the hon. Gentleman said in the opening part of his question. There are few supporters anywhere for the idea of a neutral Germany. Whether in the East or the West, people perceive the real danger that that could produce. We stand strongly for Germany being in NATO. The location of troops in East Germany is obviously an issue, but the location of Germany in NATO is important. Germany is a crucial country to the NATO Alliance and that is why its presence there is important. The hon. and learned Gentleman will forgive me if I do not go into individual service aspects of our review of options for change.

Sir Peter Emery: In view of my right hon. Friend's answer to the hon. Member for Woolwich (Mr. Cartwright) on question No. 3, and the relationship that Germany must have to that, in the review that is being carried forward will he press the Americans to set a level for the troop requirements in Europe in conjunction with General Galvin and ourselves, as it is essential that we should be able to give a lead to the rest of NATO on what we believe is necessary for the proper defence of Europe even after the conventional force reduction treaties?

Mr. King: I am grateful to my hon. Friend. He is exactly right. Consultation in NATO is vital and General Galvin, with his military responsibilities, clearly has an important part to play in that. We must consider any changes in clear


consultation with all the members of NATO to ensure that effective security is maintained, and the Americans are an extremely important partner in that.

Mr. O'Neill: What aspects of flexible response does the Secretary of State consider are still applicable in central Europe, and in which countries does he propose to extend a programme of forward defence, given that after Sunday of next week Hungary, Czechoslovakia and Poland will have some semblance of democratic government? Does he anticipate having blitzkriegs in those countries and using short-range and medium-range nuclear weapons on them?

Mr. King: That is a pretty savage attack by an hon. Member on the NATO defence strategy to which I understood that he and his colleagues were supposed to subscribe. It is NATO defence policy to support flexible response and forward defence, and any changes that we make in that policy will be made only after consultation with all our allies in NATO. If the document that I have here is the sum total of the new Labour defence strategy—there is only one paragraph that is not a criticism of the Government and contains a new policy—it is wrong anyway because it talks about consultations with the Netherlands, Belgium and Britain, but there are many more countries in NATO, and if the Labour party proposes not to consult them it will be changing its policy once again.

Defence Procurement

Mr. Thurnham: To ask the Secretary of State for Defence whether he is making any revisions to the future level of defence procurements; and if he will make a statement.

The Minister of State for Defence Procurement (Mr. Alan Clark): Plans for all aspects of defence expenditure, will be reviewed in the 1990 public expenditure survey.

Mr. Thurnham: Should not British contractors look more towards Europe? Why should not we sell Sea Harriers to the French? The French navy has apparently had no inquiries from any British defence contractor in relation to any British equipment.

Mr. Clark: I cannot answer for the purchasing policy of the French navy, but my hon. Friend is incorrect. British businesses have sold a lot of equipment to the French navy. Racal recently sold it a communications system. We have recently endorsed our confidence in the Sea Harrier and I am glad to announce that within the past few days we have placed an order for a further 10 Sea Harrier FRS2 aircraft to replace those likely to be lost through attrition and sustain the Sea Harrier capability.

Mr. Duffy: Will the Minister confirm that the opening up of the defence market for defence procurement, as confirmed at Gleneagles last month, will offer the prospect of a more cost-effective level of defence spending, to the relief of the British taxpayer, and will open up the prospect of more jobs for members of the Amalgamated Engineering Union, the Manufacturing, Science and Finance Union and the General, Municipal, Boilermakers and Allied Trades Union, which is the prime objective of all those trade unions?

Mr. Clark: I am glad to hear what the hon. Member has said. I do not know what the attitude of those unions

would be to his party's policy statement, with its undercurrent of drastic reductions. Certainly at the Gleneagles meeting, chaired by my right hon. Friend the Secretary of State, there was a mutual exchange of contract bulletins which means that industries in all the countries attending will have access to one another's defence procurement contracts.

Mr. Trotter: Does my hon. Friend accept that whatever the changes taking place in eastern Europe and the Soviet Union, large-scale manufacture of modern tanks continues in the Soviet Union? Does he accept that there is a continued need to replace the British tank fleet and to go ahead with the development of Challenger by Vickers?

Mr. Clark: We want the Challenger 2 development programme to proceed smoothly. When it is concluded we shall examine all the options which determine the type of tank we choose and the quantity.

Low Flying

Mr. Foulkes: To ask the Secretary of State for Defence what recent representations he has received on low flying; and if he will make a statement.

Mr. Neubert: During January 1990, the Minister of Defence received 381 inquiries or complaints about military low flying in the United Kingdom.

Mr. Foulkes: With all those complaints, is the Minister aware of the increasing, deep and widespread concern in my constituency and other tactical training areas at the dangers and environmental problems created by the increased amount of low flying? In view of the major changes now taking place in eastern Europe and in the Soviet Union, will the Minister tell the House what is the strategic justification for continuing and increasing this intolerable nuisance?

Mr. Neubert: We welcome the developments in eastern Europe and elsewhere, but that is no argument for not having strong, effective and highly trained forces to support NATO's defence strategy. Low flying remains potentially the most successful way of penetrating sophisticated ground and air defences. Our pilots must be trained to do that. However, we understand its impact on people, in their homes and outside. That is why we have devised a scheme whereby low flying is spread widely.
According to the most recent report of the Comptroller and Auditor General, although Scotland comprises 30 per cent. of Great Britain's land mass, it is used for only 10 per cent. of low-flying training. Although I recognise that the training is spread unevenly throughout Scotland, I do not believe that the hon. Gentleman is justified in making complaints in those terms.

Mr. Dickens: Is my hon. Friend aware that the Royal Air Force, in which I served, is the finest in the world? But the aircraft that fly low across the Saddleworth and Littleborough moors in my constituency do not keep to the moors. They frighten and terrorise the people who live in the foothills and villages. They also terrorise farm animals and domestic pets. Will he instruct the Ministry of Defence to keep away from the villages in my constituency?

Mr. Neubert: My hon. Friend has so many talents that I am surprised to learn of yet another, but I welcome him


to the ranks of those who support the Royal Air Force in this place. I confirm that the RAF has an excellent safety record. Last year there were only 15 major RAF accidents, which is a rate of 0·31 major accidents per 10,000 hours of flying. We make every effort to minimise the impact of low-flying training, in whatever part of the country it takes place. However, we must ensure that our pilots can practise this very necessary skill.

Land Holdings

Mr. Haynes: To ask the Secretary of State for Defence what is the extent of his Department's current land holding; and what plans he has to acquire further land.

Mr. Archie Hamilton: At 1 April 1989, the latest date for which statistics are readily available, the Ministry of Defence held 241,300 hectares of freehold and leasehold land and foreshore throughout the United Kingdom. From time to time it is necessary to acquire land to meet specific requirements, although we are determined that the defence estate should be no larger than necessary for the requirements of the armed forces.

Mr. Haynes: Is the Minister aware that in the wild west of America during the 1890s there were many people around who were known as land-grabbers? The Ministry of Defence is a land-grabber; it grabs as much land as it can get hold of. Why does not the Ministry keep its grubby hands off it? The Ministry should leave the land alone so that it can be made available to people for leisure activities such as fishing and walking. It has enough land.

Mr. Hamilton: The Ministry of Defence makes its land available to people who want to enjoy the countryside, and in many areas we have preserved the fauna and flora. I must put the hon. Gentleman right on his facts. Since 1979, the Ministry of Defence has got rid of 10,000 hectares.

Mr. Brazier: Does my hon. Friend agree that training land is essential if our armed forces are to have adequate space in which to practise their professional skills and that the space available to them is becoming increasingly cramped? We want our armed forces to maintain their very high standards. Does my hon. Friend agree that the pressures may increase if members of the armed forces have to be brought back from Germany? Therefore, is not the Ministry of Defence right to be reluctant about selling too much land?

Mr. Hamilton: My hon. Friend is right. When opportunities arise to add to training areas by buying contiguous areas of land, we look hard at those options.

Defence Industries

Mr. Battle: To ask the Secretary of State for Defence whether he has any proposals to assist in the conversion of defence industries to civil production.

Mr. Alan Clark: No. British industry is perfectly capable of determining its own product ranges without Government assistance.

Mr. Battle: In the light of international developments, and in particular, reductions in defence, will the Minister reaffirm the statement of the Foreign Secretary that it is Government policy to turn tanks into tractors? What

long-term prospects does he hold out for workers in factories such as Vickers Barnbow in Leeds who are awaiting a Government decision on whether to order the tanks that they make? Or is he effectively telling them that their prospects are increased war work or no work?

Mr. Clark: That is complete nonsense. The Labour party is very hot on generating this smokescreen to conceal the probable results of the implementation of its plans. I suggest that the hon. Member has a quiet word with the hon. Member for Sheffield, Attercliffe (Mr. Duffy) on the attitude of unions to this subject.

Mr. Batiste: Does my hon. Friend agree that, however optimistic a forecast one makes of future defence force reductions, British forces will need the latest, most modern and most effective equipment and that there will be considerable export opportunities? Will my hon. Friend therefore take this opportunity to repudiate the call by the right hon. Member for Leeds, East (Mr. Healey) for the immediate abandonment of the programme for the development of the Challenger 2 tank at Vickers?

Mr. Clark: There is no question of that programme being abandoned until the results of the trials are complete and the product can be evaluated in comparison with its competitors.

Mr. Rees: If there are to be changes in central Europe, is not it likely that tanks will not be required in the same number? We are all concerned about those who work at Barnbow, and the answers that we have had from Ministers so far do not enable us to talk with the work force there on any firm basis. Is there any chance of the Government talking to Vickers about transforming tanks into tractors, or something like that?

Mr. Clark: My right hon. Friend the Secretary of State has said that all options are under consideration. Plainly, I cannot give an assurance at the present time that any item of equipment will be issued in a particular volume.

Dr. Hampson: Does my hon. Friend agree, however, that there is far greater opportunity for the work force at Vickers in Leeds since we sold the royal ordnance factory to Vickers and it built the new factory, which is an enormous investment? Can he offer us a time scale in which he thinks he will come to a decision on the number of tanks and accept that the development programme is working well, because there is much uncertainty and anxiety in the city?

Mr. Clark: I entirely appreciate that concern, but, as I say, we cannot come to a decision on Challenger 2 until the evaluation programme is complete, and that will not be until the end of September this year.

Air-to-Surface Missile

Mr. Flynn: To ask the Secretary of State for Defence what are his latest plans to deploy a new tactical air-to-surface missile.

Mr. Archie Hamilton: We are currently studying options for the replacement of our WE177 free-fall nuclear bomb. Both French and American systems are being looked at, but as yet no decisions have been taken. It is not our practice to comment on the individual systems under consideration.

Mr. Flynn: Will the Minister confirm that as cruise missiles depart from Britain they will be replaced by a deadlier and more numerous short-range attack missile—SRAM-T? Is not this a deceit of disarmament and in reality massive rearmament by stealth, and rearmament which is wasteful and futile? When will the Ministry of Defence follow the fine example of the United States and our European partners and answer a changing world situation with a flexible response?

Mr. Hamilton: I am glad that the hon. Gentleman mentioned flexible response. That is and remains a key element of NATO strategy and there is no question of a breach of the INF treaty, which is for land-based missile systems.

Mr. Bill Walker: Does my hon. Friend agree that in the real world if a pilot is to deliver a free-fall bomb against sophisticated air defences he must fly low and fast and that he must be capable of getting back? That is why it is necessary to have a stand-off capability so that pilots—and very expensive pilots they are—are not exposed to this kind of risk.

Mr. Hamilton: My hon. Friend is right; we must have a stand-off capability. We must also have pilots who are trained to fly low so that they can penetrate enemy radar.

Mr. Graham: Does the Minister realise that missiles are tested and stored in the Bishopton Royal Ordnance factory, which covers a huge part of Renfrewshire? The Secretary of State is prepared to withdraw the Ministry of Defence police who guard the area and who are always available to use arms if the factory is invaded by terrorists or criminals. The Secretary of State did not reply to my letters requesting a meeting regarding the storage of missiles and weapons, yet he is prepared to allow my area to be left in danger. Does he realise that 250,000 people will be placed in danger because of his stupidity and ineptitude?

Mr. Hamilton: I am very unclear what that supplementary question has to do with the replacement of the WE177 free-fall bomb. The security at former royal ordnance factories, whether or not it is carried out by Ministry of Defence police, is paid for by Royal Ordnance. That is why other provisions have been made for security at Royal Ordnance factories. I am sure that security is being maintained at an appropriate level.

Eastern Europe

Mr. Maples: To ask the Secretary of State for Defence whether his Department has reconsidered its military commitments to NATO in the light of recent developments in eastern Europe.

Mr. Tom King: As I have already made clear, we shall continue to support NATO's deterrent strategy, which offers the best means of ensuring peace and security. But we shall continue to examine options for change in the light of developments and we hope that they will include a successful outcome to CFE.

Mr. Maples: Although developments in Europe should enable substantial arms reductions to be negotiated, does my right hon. Friend agree that Europe is entering a potentially unstable period and that NATO will continue to be an essential stabilising influence?

Mr. King: Every day that goes by there are fresh developments. Today's announcement is a further development in the current confused situation. That is why until the position is very much clearer it is essential that we co-operate with our NATO allies and remain firmly in support of the NATO defence strategy.

Mr. Douglas: In reviewing NATO strategy, will the Secretary of State have a care about the probable phenomenom in central Europe of a united Germany, and will he pay particular attention to the need to ensure that that united Germany never has the capability of delivering strategic nuclear weapons?

Mr. King: That is governed by a treaty at present, and I am not aware of any proposals to alter the position. I have already emphasised that we attach great importance to the continuing role of a united Germany within NATO. Germany is a key member of NATO and it is very important that it remains so.

Defence Support Functions

Mr. Barry Field: To ask the Secretary of State for Defence what further steps his Department is planning to take to ensure the involvement of the private sector in the supply of defence support functions.

Mr. Neubert: Our policy is to expose to competition from the private sector all those defence support activities where there are no overriding operational or security reasons for keeping the work in-house. We estimate that that continuing programme has already generated savings currently running at £55 million a year.

Mr. Field: As civilian contractors are now used for aircraft maintenance, simulated electronic warfare and as pilots, as well as for target practice—although not of course as individuals—why, in the modern services of 1990 and in the future, cannot we have centralised messes for the expensive forces in our garrison towns?

Mr. Neubert: We have made great progress in several diverse areas in bringing in private contractors, notably for catering and cleaning. Catering is a very local service, and we have increased the number of contracts offered by the MOD from nine in 1987 to 45 last year. We are providing the opportunity for catering and mess arrangements to be improved considerably by private contractors.

Mr. Win Griffiths: Does the Minister recognise that many parents are concerned about the fact that security at places such as Marines school of music at Deal is still in the hands of untrained private contractors? Is he aware that the sooner that job is taken over directly by the services, the better it will be for all service personnel?

Mr. Neubert: Private security guards are brought in to supplement the standard arrangements by uniformed personnel and it should not be presumed that the standards applying to them are any less than those that apply to military personnel engaged in those duties. By bringing in private contractors we can release highly trained service men to matters of higher military priority and enable them to use the skills that they alone have.

Oral Answers to Questions — PRIME MINISTER

Engagements

Mr. Callaghan: To ask the Prime Minister if she will list her official engagements for Tuesday 6 March.

The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today. This evening I hope to have an audience of Her Majesty the Queen.

Mr. Callaghan: Is the Prime Minister aware that a recent report by the building societies and the banks said that more than 500,000 householders in Britain are more than two months in arrears with their mortgage repayments? It also said that, last year, 13,500 housesholders had their house taken from them because they could not pay high interest rates of up to 15·4 per cent. As they will have the added misery and burden of the poll tax round their necks from next month, may I ask the Prime Minister to say what financial support she is prepared to give to householders, or does she intend to tell them a thing or two? Or will she do the decent thing, copy the Secretary of State for Wales and go?

The Prime Minister: Perhaps the hon. Gentleman will recall that we have had questions before about that report. Sad though it is that some people have difficulties with mortgages, the repossession rate is less than one third of 1 per cent. of those who are paying mortgages, and over 99 per cent. of those with mortgages are well able to meet their repayments. The number of people who own their own homes has gone up from 11 million under Labour to 15 million under the Conservatives.

Mr. Speaker: Sir Anthony Meyer—[HON. MEMBERS: "Hear, hear!"] Order. This sort of thing takes up a great deal of time.

Sir Anthony Meyer: Is the Prime Minister aware that many hundreds of my constituents, having lost the treasured possessions of a lifetime, now find that they are not, as they thought, covered by insurance because storm damage excludes flood? In those circumstances, they are uniquely dependent on the mayor's disaster fund. Is she aware of the feeling that the Government's contribution to that fund, although welcome, compares unfavourably with what they, rightly, give to overseas earthquake victims?

The Prime Minister: We tried to make the contribution to the fund proportionate to what we understood was the damage and in accordance with the usual rules applying to other disasters in the country. If that is not so, of course we shall look at the matter again.

Mr. Kinnock: Will the right hon. Lady take the opportunity of this Question Time firmly to reject the calls coming from those in the City who want interest rates to be raised yet again?

The Prime Minister: As the right hon. Gentleman is aware, interest rates are at the level which it is deemed necessary to press down on inflation, and they will stay at whatever that level is.

Mr. Kinnock: Many millions of people will be very disappointed by the Prime Minister's refusal to be firm in this matter. Is not it obvious that her high interest rate

policies are hitting home buyers and businesses, but are certainly not controlling credit? Is not it obvious that the policies are hurting, but definitely not working? Will the Prime Minister change those policies before she pushes the British economy further into stagnation and inflation?

The Prime Minister: I believe that the policies are working and that activity is being reduced. The right hon. Gentleman asks me to make further comments on interest rates. He knows that that could only help speculators and it is a totally irresponsible question on his part.

Mr. Kinnock: No Prime Minister has been more of a speculators' friend than the right hon. Lady. At the same time as she is the friend of the speculator, she is the enemy of business and of the home buyer.

The Prime Minister: Business has a higher rate of output than ever before in history, a higher number of people employed than ever before in history and a higher rate of investment than ever before in history. The right hon. Gentleman is trying to upset that by being the speculators' friend.

Mr. Atkinson: Will my right hon. Friend confirm the Government's continuing concern for the plight of the homeless unemployed, especially those suffering from alcoholism and schizophrenia, and those under the age of 25? Will she consider introducing new responsibilities for local authorities to provide adequate sheltered overnight housing, with counselling support, to break that cycle of deprivation?

The Prime Minister: I agree with my hon. Friend that some people who suffer from those illnesses and are homeless represent a particular problem. However, it is not enough to provide housing for them unless they also receive some counselling, and some will require community care for their problems. As my hon. Friend knows, we have a very considerable programme for increasing housing for the homeless, and for beds in the city of London and elsewhere. I agree with my hon. Friend that those people need counselling, too, and we have that very much in mind.

Q.2 Mr. Michael J. Martin: To ask the Prime Minister if she will list her official engagements for Tuesday 6 March.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Martin: In Scotland, local government officials are finding it difficult to collect the poll tax effectively. The Prime Minister will know that this morning BBC radio stated that the people of England will be 30 per cent. worse off than they were last year with the old rating system. The Prime Minister's hon. Friends are deserting her. Why does not she give up this irrational obsession to implement the poll tax?

The Prime Minister: I was very glad that the "Today" programme this morning virtually confirmed the figure that I gave the House on 20 February, when I pointed out that if local authorities were going to spend up to about £3 billion over what the Government considered reasonable, that would be equivalent to—[HON. MEMBERS: "Reading."] I am quoting from what I said. That would be equivalent to a 35 per cent. increase in domestic rates. I am delighted that, for once, the BBC and I are in total


agreement. That increase comes, of course, from high-spending authorities, which are spending well above what they should.
I am pleased to note—the hon. Gentleman did not mention this—that the combined regional and district community charge for Glasgow city district has gone up by only 10·5 per cent., which is high enough, but very much less than in some other Labour authorities.

Mr. Hayes: Does my right hon. Friend agree that it is rank hypocrisy for Left-wing Harlow council to try to pin the blame for a £425 community charge on the Government, when it is the highest-spending local authority in the country? Does she accept——

Hon. Members: Bye, bye!

Mr. Speaker: Order.

Mr. Hayes: Does my right hon. Friend accept that although there will be some stormy weather over the next few weeks, eventually the public will realise that the community charge is there to protect them against high-spending authorities—[Interruption.]

Mr. Speaker: Order. It is very disorderly to have this sort of noise.

The Prime Minister: The community charge will ensure that local councils are accountable to their local electors. Those that set high community charges are doing so because their expenditure is profligate and because they have little consideration for their electors' pockets. The lesson will be learnt that Labour authorities are the high spenders and that Conservative authorities look after their electors' money.

Mr. Cohen: To ask the Prime Minister if she will list her official engagements for Tuesday 6 March.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Cohen: The Government admit that the high interest rate and mortgage rate policy is a deliberate attempt to reduce people's other spending, but it has led to a vast increase in repossessions. Will the Prime Minister act to stop the courts repossessing in cases where high mortgage rate rises are the primary cause of debt, or is repossession an integral part of the Government's economic policy?

The Prime Minister: The hon. Gentleman should recall the figures. Repossessions are less than one third of 1 per cent., and in the past they have been higher. That does not help those in difficulty, but it does not alter the fact that 99 per cent. of those with mortgages can meet their repayments and continue to invest in home ownership. Interest rates benefit people who place their deposits with building societies and those who are trying to build up a high deposit to purchase a home when house prices are falling.

Mr. Sayeed: Is my right hon. Friend aware that in Avon, due to a mixture of fiscal incompetence and overspending, the Labour and Liberal parties have set a budget that is likely to result in a community charge of more than £500 per person in Bristol, despite the fact that

they will receive £23 from the safety net? Will my right hon. Friend contrast that with the position in Westminster where, despite being an inner-city area and paying £75 per person towards the safety net, the Conservative administration has set a charge of only £195?

The Prime Minister: I agree with my hon. Friend. According to the Association of County Councils, Avon is one of the top 10 county council overspenders. He rightly contrasted the position in Avon with that of Westminster where, with a good Tory council, there is a low community charge. We are very grateful for its careful stewardship.

Mr. Malcolm Bruce: To ask the Prime Minister if she will list her official engagements for Tuesday 6 March.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Bruce: Does the Prime Minister agree that it is a little strange that the Tories who are now squealing about the poll tax did nothing when the people of Scotland complained? Does she accept that the tax is unfair and unworkable and that a roof tax would be no fairer and no more workable? If income tax is the fairest way to finance central Government, would not it also be the fairest way to finance local government?

The Prime Minister: Perhaps the hon. Gentleman will recall what happened in Scotland when domestic rates were revalued after seven years. There was an absolute outcry, far louder than anything heard about the community charge. The community charge is now working in Scotland. The hon. Gentleman may also recall that under the old rating system throughout the United Kingdom, some 17 million people did not pay rates, leaving 12 million people to pay them in full. That was an unfair system, and it is being replaced by a much fairer one.

Mr. Amess: To ask the Prime Minister if she will list her official engagements for Tuesday 6 March.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Amess: Has my right hon. Friend noticed the contrast between the community charge of £148 set by Conservative-controlled Wandsworth council and the £478 set by Labour-controlled Basildon council? Does she agree that the high charge in Basildon is a result of subsidising the theatre by £1·6 million, building a huge civic centre without a council chamber and sending everyone a Valentine card at a cost of £46,000? Will my right hon. Friend urge the Secretary of State for the Environment to cap the charge in Basildon?

The Prime Minister: I agree with my hon. Friend that community charge payers would rather have had a lower community charge than some of those extravagant things. The contrast with Wandsworth will be even more effective when next-door Lambeth announces its community charge, which is rumoured to be very high. We cannot say which councils will be charge-capped. That is a matter for my right hon. Friend the Secretary of State. He will make his decision when the time comes, but where there has been excessive spending he will not hesitate to use his powers.

Lowlands Airports

Mr. George Foulkes: I beg to seek leave to move the Adjournment of the House under Standing Order No. 20 to discuss a specific and important matter that should have urgent consideration, namely,
the announcement today by the Secretary of State for Transport of a review of Scottish lowlands airports policy.
The House should debate the matter, because it has serious implications not just for air transport in Scotland but for employment in Ayrshire—[Interruption.]

Mr. Speaker: Order. Will hon. Members who are not remaining for the application please leave quietly?

Mr. Foulkes: Thank you, Mr. Speaker.
Hon. Members whose constituencies are under the flight paths at Glasgow and Edinburgh, like my hon. Friend the Member for Clydebank and Milngavie (Mr. Worthington), will wish to express their concern about the environmental impact and the increased dangers that extra flights will pose at both those airports. It has also emerged today that, in Glasgow, check-in facilities for transatlantic flights will have to—[Interruption.]

Mr. Speaker: Order. I ask the House please to listen and to stop the private conversations on both sides.

Mr. Foulkes: It has also emerged today that, at Glasgow airport, check-in facilities for transatlantic traffic will have to be in portakabins in the car park, with consequent problems for security and safety. Those of us who have Lockerbie still sharp in our memories will realise some of the possible implications.
In his statement, the Secretary of State himself also says that he recognises that the change in policy will have "an

adverse impact" on employment in Ayrshire. As you know, Mr. Speaker, unemployment there is already well above the national average. For that reason alone, it is an urgent and important matter, but it is also not clear whether it is intended that the British Airports Authority should retain its monopoly of Scottish airports or, indeed, whether the Secretary of State intends that there should be real competition by insisting that the BAA divests itself of the ownership of Prestwick and allows Prestwick to compete fully with Glasgow airport.
For all these reasons—the environmental impact, safety and security, and employment in Ayrshire—and other matters that need to be clarified, I submit that the only way the matter can be properly dealt with is by an urgent debate in the House. Even with the consolation clauses which the Secretary of State has included, today's announcement is unwelcome in Ayrshire and in Scotland. I hope, Mr. Speaker, that you will give Scottish Members an opportunity of expressing concern by agreeing to a debate on this urgent and important matter.

Mr. Speaker: The hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes) asks leave to move the Adjournment of the House for the purpose of discussing an important and specific matter that he believes should have urgent consideration, namely,
the announcement today by the Secretary of State for Transport of a review of Scottish lowlands airports policy".
I have listened with concern to what the hon. Member has said about the matter, but, as he knows, the difficult decision that I have to take is whether to give it precedence over the business set down for today or for tomorrow. I regret that, in this case, the matter that the hon. Gentleman has raised does not meet the requirements of the Standing Order, and I therefore cannot submit his application to the House.

Points of Order

Mr. Barry Jones: On a point of order, Mr. Speaker. You are the acknowledged champion of the House against the Executive. It is in that context that I seek your help. Bearing in mind both the integrity of the Secretary of State for Wales and the bizarre circumstances of his announcement, on Sunday, of his imminent retirement, we ask the Leader of the House and the Secretary of State for Wales come before the House with a statement. This is a very critical time for Wales and its economy, yet the Secretary of State for Wales is a lame duck. We believe that the best thing he could do would be to go now.

Mr. Speaker: rose——

Mr. Jones: Briefly, Sir.

Mr. Speaker: Order. This is an Opposition day, and I have had no request at all for a statement on this matter.

Mr. Jones: Very briefly, Sir, may I ask you if you recollect that when Lord Joseph—formerly Sir Keith Joseph—made a similar statement of intent, the episode ended in tears and the hon. Gentleman left high office within weeks? May I ask you to use your best endeavours to bring both the Secretary of State for Wales and the Leader of the House before the House with a statement about the decision of the Secretary of State——

Mr. Speaker: Order. That has nothing at all to do with me.

Mr. Barry Porter: On a point of order, Mr. Speaker. May I refer back to Question Time, when, yet again, we had a series of mini-speeches from Members on both sides of the House? That spoils the point of Question Time. If you, Sir, chose to cut short these perorations, you would have the support of all moderate and sensible Members of the House—that is, myself.

Mr. Speaker: I am most grateful to the hon. Gentleman for his very helpful point of order. It is not fair to the House for Members to ask long questions. It tends to happen in the case of the first supplementary question to departmental Ministers, and very frequently at Prime Minister's Question Time. In future, I shall cut Members short if they ask more than one question, and I hope that, in doing so, I shall have the support of the House.

Mr. Donald Anderson: Further to the point of order raised by my hon. Friend——

Mr. Speaker: Order. The hon. Member knows that I cannot do anything about that matter. It has absolutely nothing to do with me.

Mr. Anderson: rose——

Mr. Speaker: Order. No. There are other ways of getting at things like this.

Mr. Graham Riddick: On a point of order, Mr. Speaker. I hope that my point of order will be slightly more genuine than the one you have just heard.
You may be aware of newspaper reports over the weekend suggesting that the Football Association intends to bring a charge against my hon. Friend the Member for

Welwyn Hatfield (Mr. Evans) for bringing the game—presumably the game of football—into disrepute. It seems to me that my hon. Friend has said one or two very sensible things about the game of football, although—being so close to Manchester—I am not sure that I altogether agree with his comment about Manchester United being tripe.
It seems to me that the football authorities could well be seen as trying to gag my hon. Friend. He has quite often—justifiably, in my view—put the boot into the football establishment, and it seems that that establishment is now trying to shut him up. Do you, Mr. Speaker, have any——

Mr. Speaker: Order. The hon. Member for Welwyn Hatfield (Mr. Evans) is here, and he has not complained about the matter. If the hon. Member for Colne Valley (Mr. Riddick) is alleging that a contempt of the House has been committed, he must write to me in the usual way, and
I shall give the matter most careful consideration.

Mr. Riddick: Further——

Mr. Speaker: Order. No, I have dealt with that matter.

Mr. Ray Powell: On a point of order, Mr. Speaker. Yesterday—as can be seen from column 591 of Hansard—you described a point of order raised by me as "bogus". May I respectfully suggest that those of us who represent Welsh constituencies are truly concerned at the fact that, at this stage, industries and others may not wish to negotiate with the person who represents Wales in the House of Commons and in the Government because of his intended resignation? I believe that it is within your ambit to be able to decide whether a Minister can be called on to give reasons for his resignation.

Mr. Speaker: If such a request were made to me, that would be a different matter. I am sorry if I offended the hon. Gentleman——

Mr. Speaker: The hon. Gentleman gave me the opportunity to use the word "bogus" by saying that he hoped that his point or order was not bogus. Perhaps he would have preferred me to use another word.

Mr. Nicholas Bennett: On a point of order, Mr. Speaker. May I ask your advice on two matters concerning procedure and the possibility of a statement? I refer you to early-day motion 659, which concerns the National Union of Mineworkers and allegations about a £5 million payment from Libya.
First, Mr. Speaker, have you received an application for a statement from the Attorney-General from any Opposition Member? Secondly, is it in order to debate the matter, on the ground that it is not sub judice because the NUM has instituted no proceedings against the Daily Mirror or the BBC?

Mr. Speaker: I have had no request for a statement. Whether a debate should take place is a matter for the Leader of the House, and the hon. Gentleman's question should properly be directed to him during business questions on Thursday.

Mr. Alex Salmond: On a point of order, Mr. Speaker. Today's announcement about lowland airports policy is the second major economic announcement in a week that affects Scotland and has


been made in the form of a written answer rather than an oral statement. What powers have you, Mr. Speaker—in relation to allowing private notice questions or applications under Standing Order No. 20—to grant Scottish Back Benchers the right to question Ministers on important matters of policy?

Mr. Speaker: The hon. Gentleman knows the limits of my power, which are set out in the Standing Orders. He need not have asked that question.

Mr. Andrew Faulds: On a different point of order, Mr. Speaker. As you know, I rarely bother you, but over the past few weeks an important matter has arisen.
In the old days, when there was a hubbub in the House—as there is occasionally—we could hear what was being said through the speakers on the back of the benches. For some reason, the volume has now been lowered. Are you able to find out from the Chairman of the Committee on the Televising of the Proceedings of the House whether, to oblige outside listeners, the microphones have been turned down so that hon. Members can no longer hear? I am not the only hon. Member who has noticed the change. Will you make a statement to the House, Mr. Speaker.

Mr. Speaker: The matter has been raised with me once or twice before, and it is under active consideration. I accept that there has been some problem with the amplifiers, but I do not know whether that has anything to do with the televising of the House. Let us face it: as the hon. Gentleman knows, the microphones are not exactly new, and should perhaps be replaced at an appropriate time.

BILLS PRESENTED

WRITTEN CONSTITUTION

Mr. Graham Allen presented a Bill to provide for the drawing up of a written constitution for the United Kingdom; for its consideration by the people and Parliament of the United Kingdom; and for connected purposes: and the same was read the First time; and ordered to be read a Second time on 6 July and to be printed. [Bill 90.]

BLASPHEMY

Mr. Harry Greenway presented a Bill to make provision for the punishment of persons who blaspheme against certain religions: And the same was read the First time; and ordered to be read a Second time on 30 March and to be printed. [Bill 89.]

Mr. Speaker: Welsh Affairs.

Mr. Sydney Chapman: Not moved.

SCOTTISH AFFAIRS

Ordered,
That the matter of Scottish Local Government Finance, being a matter relating exclusively to Scotland, be referred to the Scottish Grand Committee for its consideration.—[Mr. Chapman.]

Tax Relief for Household Employers

Mrs. Teresa Gorman: I beg to move,
That leave be given to bring in a Bill to allow tax relief on earned income in respect of the earner's employment of home helps, child minders and other workers in cases where such employment is essential to the earner's availability for work, and for connected purposes.
My Bill calls for tax relief for household employers. Every day, millions of women perform an incredible juggling act by going out to work and managing their homes and families at the same time. About 45 per cent. of all the jobs in our work force are carried out by women, the great majority of whom are married. Over two thirds of women with children go to work. The Hansard Society recently produced a report calling for more women in top jobs. I have raised that issue here in the House with my right hon. Friend the Prime Minister.
In addition, a great many employers are anxious to gain more women back into the labour force. In The Mail on Sunday, the Secretary of State for Employment called for more older women to return to the labour force. There is no doubt that women at work are an established part of our economy, yet if those women pay somebody to help them to look after their children or their home, they must pay for it out of their taxed earnings. In some cases, that means that they spend half—or perhaps more—of what they earn, and in those circumstances it hardly seems worth their while going out to work at all.
Some women have to go out to work to help with the household budget; others work because they have a skill that they want to contribute. We are short of teachers, especially in our primary schools, and we want more of them. We are also short of nurses, and want more of them, too. There are a great many jobs for which women are trained and skilled and in which they could help in the economy if only we made some concession to their needs.
My Bill calls on the Government to allow those expenses that are reasonably incurred by a women who goes out to work to be treated as a business expense and to be offset against her pre-tax pay. The present situation is a mess and a muddle. The Treasury's attitude is almost that women work for pin money and that the money they earn can be used to pay granny or a neighbour a few shillings or pounds to look after the work that they have left behind at home.
That is make-believe. Nowadays, someone who looks after somebody else's children rightly has to be properly prepared for that work, and the circumstances in which they carry out such a job have to be vetted to be sure that they are suitable. All that means that, if a woman wants to hire help for her family, she has to pay a high price—certainly the market price—which may well be a substantial part of her earned income.
If an employer provides a creche or a nursery, and the employee who benefits from it earns more than £8,500 per year, it is treated as a tax perk and the employee is taxed on it. Of course, it is not always sensible for a woman to take her children to work with her. The journey may be long and travelling to work and back again with children may be unsuitable. The woman may prefer her child to be looked after locally, perhaps in a creche or by a friendly neighbour who has adequate facilities, but either way the woman has to pay for it.
Some employers have introduced child care vouchers, along the same lines as luncheon vouchers. However, that is not always possible or the most satisfactory way of dealing with this issue. Although some large employers, including the Treasury, now provide facilities for people who work for them, a majority of women will always work for small companies and will not be able to enjoy such facilities at work.
I am sure that the Inland Revenue would look askance at such a concession, because it will regard it as a loss of revenue. However, such a change in our tax structure would be enormously cost-beneficial. Not only would it release many women to go out to work and thus to add to the national income from which the Revenue collects its taxes: it would also provide many more jobs associated with the home. Some young people might like to provide some help with children, and perhaps a bed-sitting room would be thrown in, which might help with some of our homelessness problems. Such work might also help retired people who might like a little part-time job associated with someone else's household which would help to supplement the pension. For all those reasons, the effect of the changes that I propose would be enormously beneficial to the economy.
That leaves opponents of the old Tufton Bufton school, who believe that a woman's place is beside the kitchen sink. There will always be a place here for neanderthal man, whether he comes from far afield or as close as Orpington. But there will always be a demand—and an increasing demand—for women to come out and contribute to our economy.
The Government cannot have it both ways. If they want more women to devote time, energy and skill to the economy, they must do something to help them. The most equitable, fair and sensible way to do that is to treat the job that she creates as any other job and allow its cost to be deductible from her pre-tax earnings.

Mr. Ivor Stanbrook: I oppose the introduction of the Bill because, if enacted, it would be harmful to children, destroy family life and make worse the injustice at present suffered by mothers who work at home without pay. My hon. Friend the Member for Billericay (Mrs. Gorman) wants to make it profitable for mothers of young children to leave them with child minders and collect tax relief on the cost.
There is overwhelming evidence that most mothers of young children who go out to work thereby cause psychological injury to themselves as well as to their children. As my hon. Friend said, some mothers may be obliged to do so, but that should not blind us to the fact that the consequences of depriving young children of love and affection within a stable family unit cause much social evil, reflected in the high figures for crime, vandalism, divorce and plain cruelty to children. Children have a personal, social and spiritual need for love and affection and for the presence and time of those who love them. It is a crime to deprive children of that, yet that is what my hon. Friend seeks to encourage in her Bill.
My hon. Friend speaks as if there were some vast pool of vacancies waiting to be filled by working mothers. If there are so many jobs available, why are there 2 million

unemployed, and how many jobless people are already being done out of a job by working mothers? If there are so many jobs to be done, why do we insist on retiring people at 60 or 65, when many are in the prime of life, and only too anxious to go on contributing to society?

Mrs. Maureen Hicks: Will my hon. Friend give way?

Mr. Speaker: Order. We do not have interventions in ten-minute Bills.

Mr. Stanbrook: The Bill is an affront to mothers who see it as their duty to stay at home with their children. They already suffer from the tax system, which penalises them for staying at home. If the Government are, as they should be, dedicated to Christian virtues or even Victorian values, they should encourage the mothers of young children to be at home with them by allowing them tax benefits for doing so rather than encouraging those who see fit to evade their responsibilities.
My hon. Friend's error lies in carrying the cult of individualism to extremes. In some ways, individualism is a stimulant to and a safeguard of liberty, but in this form it is anarchic, inherently selfish and destructive of human relationships. It is the antithesis of social responsibility. Above all, there are the children's interests to consider. Such a Bill would increase their deprivation and expose them to the risks of cruelty and abuse. That is why I call on the House to reject the Bill.

Question put, pursuant to Standing Order No. 19 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business ):—

The House divided: Ayes 125, Noes 17.

Division No. 105]
[9.59 pm


AYES


Abbott, Ms Diane
Forsythe, Clifford (Antrim S)


Adams, Allen (Paisley N)
Foster, Derek


Allen, Graham
Foulkes, George


Alton, David
Fraser, John


Anderson, Donald
Fyfe, Maria


Archer, Rt Hon Peter
Galloway, George


Armstrong, Hilary
Garrett, John (Norwich South)


Ashdown, Rt Hon Paddy
Garrett, Ted (Wallsend)


Ashley, Rt Hon Jack
George, Bruce


Ashton, Joe
Gilbert, Rt Hon Dr John


Banks, Tony (Newham NW)
Godman, Dr Norman A.


Barnes, Harry (Derbyshire NE)
Golding, Mrs Llin


Barnes, Mrs Rosie (Greenwich)
Gordon, Mildred


Barron, Kevin
Gould, Bryan


Battle, John
Graham, Thomas


Beckett, Margaret
Grant, Bernie (Tottenham)


Beggs, Roy
Griffiths, Nigel (Edinburgh S)


Benn, Rt Hon Tony
Griffiths, Win (Bridgend)


Bennett, A. F. (D'nt'n &amp; R'dish)
Harman, Ms Harriet


Bermingham, Gerald
Hattersley, Rt Hon Roy


Bidwell, Sydney
Healey, Rt Hon Denis


Blair, Tony
Heffer, Eric S.


Blunkett, David
Henderson, Doug


Boyes, Roland
Hinchliffe, David


Brown, Gordon (D'mline E)
Hoey, Ms Kate (Vauxhall)


Brown, Nicholas (Newcastle E)
Hogg, N. (C'nauld &amp; Kilsyth)


Brown, Ron (Edinburgh Leith)
Hood, Jimmy


Bruce, Malcolm (Gordon)
Howarth, George (Knowsley N)


Buchan, Norman
Howell, Rt Hon D. (S'heath)


Buckley, George J.
Howells, Geraint


Caborn, Richard
Hoyle, Doug


Callaghan, Jim
Hughes, John (Coventry NE)


Campbell, Menzies (Fife NE)
Hughes, Robert (Aberdeen N)


Campbell, Ron (Blyth Valley)
Hughes, Roy (Newport E)


Canavan, Dennis
Illsley, Eric


Cartwright, John
Ingram, Adam


Clark, Dr David (S Shields)
Janner, Greville


Clarke, Tom (Monklands W)
Jones, Barry (Alyn &amp; Deeside)


Clay, Bob
Jones, Martyn (Clwyd S W)


Clelland, David
Kaufman, Rt Hon Gerald


Cohen, Harry
Kennedy, Charles


Coleman, Donald
Kilfedder, James


Cook, Robin (Livingston)
Kinnock, Rt Hon Neil


Corbett, Robin
Kirkwood, Archy


Corbyn, Jeremy
Lambie, David


Cousins, Jim
Lamond, James


Cox, Tom
Leadbitter, Ted


Crowther, Stan
Leighton, Ron


Cryer, Bob
Lestor, Joan (Eccles)


Cummings, John
Litherland, Robert


Dalyell, Tam
Livingstone, Ken


Darling, Alistair
Livsey, Richard


Davies, Rt Hon Denzil (Llanelli)
Lloyd, Tony (Stretford)


Davies, Ron (Caerphilly)
Lofthouse, Geoffrey


Davis, Terry (B'ham Hodge H'l)
Loyden, Eddie


Dewar, Donald
McAllion, John


Dixon, Don
McAvoy, Thomas


Dobson, Frank
McFall, John


Doran, Frank
McKay, Allen (Barnsley West)


Douglas, Dick
McKelvey, William


Duffy, A. E. P.
McLeish, Henry


Dunnachie, Jimmy
Maclennan, Robert


Dunwoody, Hon Mrs Gwyneth
McNamara, Kevin


Eadie, Alexander
McWilliam, John


Evans, John (St Helens N)
Madden, Max


Ewing, Harry (Falkirk E)
Maginnis, Ken


Ewing, Mrs Margaret (Moray)
Mahon, Mrs Alice


Fatchett, Derek
Marek, Dr John


Faulds, Andrew
Marshall, David (Shettleston)


Fearn, Ronald
Marshall, Jim (Leicester S)


Field, Frank (Birkenhead)
Martin, Michael J. (Springburn)


Fields, Terry (L'pool B G'n)
Maxton, John


Fisher, Mark
Meacher, Michael


Flannery, Martin
Meale, Alan


Flynn, Paul
Michael, Alun


Foot, Rt Hon Michael
Michie, Bill (Sheffield Heeley)





Michie, Mrs Ray (Arg'l &amp; Bute)
Sheldon, Rt Hon Robert


Mitchell, Austin (G't Grimsby)
Shore, Rt Hon Peter


Molyneaux, Rt Hon James
Short, Clare


Moonie, Dr Lewis
Skinner, Dennis


Morgan, Rhodri
Smith, Andrew (Oxford E)


Morley, Elliot
Smith, C. (Isl'ton &amp; F'bury)


Morris, Rt Hon A. (W'shawe)
Smith, J. P. (Vale of Glam)


Morris, Rt Hon J. (Aberavon)
Smyth, Rev Martin (Belfast S)


Mowlam, Marjorie
Soley, Clive


Mullin, Chris
Spearing, Nigel


Murphy, Paul
Steel, Rt Hon Sir David


Nellist, Dave
Steinberg, Gerry


Oakes, Rt Hon Gordon
Stott, Roger


O'Brien, William
Strang, Gavin


O'Neill, Martin
Taylor, Mrs Ann (Dewsbury)


Orme, Rt Hon Stanley
Taylor, Rt Hon J. D. (S'ford)


Patchett, Terry
Taylor, Matthew (Truro)


Pendry, Tom
Thomas, Dr Dafydd Elis


Pike, Peter L.
Turner, Dennis


Powell, Ray (Ogmore)
Walker, A. Cecil (Belfast N)


Prescott, John
Walley, Joan


Primarolo, Dawn
Wardell, Gareth (Gower)


Quin, Ms Joyce
Wareing, Robert N.


Radice, Giles
Watson, Mike (Glasgow, C)


Randall, Stuart
Welsh, Andrew (Angus E)


Redmond, Martin
Welsh, Michael (Doncaster N)


Rees, Rt Hon Merlyn
Wigley, Dafydd


Reid, Dr John
Williams, Rt Hon Alan


Richardson, Jo
Williams, Alan W. (Carm'then)


Robertson, George
Wilson, Brian


Robinson, Geoffrey
Winnick, David


Rogers, Allan
Wise, Mrs Audrey


Rooker, Jeff
Worthington, Tony


Ross, Ernie (Dundee W)
Wray, Jimmy


Ross, William (Londonderry E)
Young, David (Bolton SE)


Rowlands, Ted



Ruddock, Joan
Tellers for the Ayes:


Salmond, Alex
Mr. Frank Haynes and


Sedgemore, Brian
 Mr. Ken Eastham.


Sheerman, Barry





NOES


Adley, Robert
Buck, Sir Antony


Aitken, Jonathan
Budgen, Nicholas


Alison, Rt Hon Michael
Butler, Chris


Allason, Rupert
Butterfill, John


Arbuthnot, James
Carlisle, John, (Luton N)


Arnold, Jacques (Gravesham)
Carlisle, Kenneth (Lincoln)


Arnold, Tom (Hazel Grove)
Carrington, Matthew


Ashby, David
Carttiss, Michael


Aspinwall, Jack
Channon, Rt Hon Paul


Atkins, Robert
Chapman, Sydney


Atkinson, David
Chope, Christopher


Baker, Rt Hon K. (Mole Valley)
Churchill, Mr


Baker, Nicholas (Dorset N)
Clark, Hon Alan (Plym'th S'n)


Baldry, Tony
Clark, Sir W. (Croydon S)


Banks, Robert (Harrogate)
Colvin, Michael


Batiste, Spencer
Conway, Derek


Beaumont-Dark, Anthony
Coombs, Anthony (Wyre F'rest)


Bellingham, Henry
Coombs, Simon (Swindon)


Bendall, Vivian
Cormack, Patrick


Bennett, Nicholas (Pembroke)
Cran, James


Benyon, W.
Critchley, Julian


Bevan, David Gilroy
Currie, Mrs Edwina


Biffen, Rt Hon John
Davies, Q. (Stamf'd &amp; Spald'g)


Blaker, Rt Hon Sir Peter
Davis, David (Boothferry)


Body, Sir Richard
Day, Stephen


Bonsor, Sir Nicholas
Devlin, Tim


Boscawen, Hon Robert
Dicks, Terry


Boswell, Tim
Dorrell, Stephen


Bottomley, Mrs Virginia
Douglas-Hamilton, Lord James


Bowden, A (Brighton K'pto'n)
Dover, Den


Bowden, Gerald (Dulwich)
Dunn, Bob


Bowis, John
Durant, Tony


Boyson, Rt Hon Dr Sir Rhodes
Eggar, Tim


Brandon-Bravo, Martin
Emery, Sir Peter


Brazier, Julian
Evans, David (Welwyn Hatf'd)


Bright, Graham
Fallon, Michael


Brown, Michael (Brigg &amp; Cl't's)
Favell, Tony


Bruce, Ian (Dorset South)
Fenner, Dame Peggy






Field, Barry (Isle of Wight)
Lloyd, Sir Ian (Havant)


Fookes, Dame Janet
Lloyd, Peter (Fareham)


Forman, Nigel
Lord, Michael


Forsyth, Michael (Stirling)
Lyell, Rt Hon Sir Nicholas


Fox, Sir Marcus
Macfarlane, Sir Neil


Franks, Cecil
MacKay, Andrew (E Berkshire)


Freeman, Roger
Maclean, David


Gale, Roger
McLoughlin, Patrick


Gilmour, Rt Hon Sir Ian
McNair-Wilson, Sir Michael


Glyn, Dr Sir Alan
McNair-Wilson, Sir Patrick


Goodhart, Sir Philip
Malins, Humfrey


Goodlad, Alastair
Mans, Keith


Gorman, Mrs Teresa
Marland, Paul


Greenway, Harry (Ealing N)
Marlow, Tony


Gregory, Conal
Marshall, John (Hendon S)


Hamilton, Neil (Tatton)
Marshall, Michael (Arundel)


Hampson, Dr Keith
Martin, David (Portsmouth S)


Hanley, Jeremy
Maude, Hon Francis


Hannam, John
Maxwell-Hyslop, Robin


Hargreaves, A. (B'ham H'll Gr')
Mayhew, Rt Hon Sir Patrick


Hargreaves, Ken (Hyndburn)
Meyer, Sir Anthony


Harris, David
Miller, Sir Hal


Haselhurst, Alan
Mills, Iain


Hawkins, Christopher
Mitchell, Andrew (Gedling)


Hayes, Jerry
Mitchell, Sir David


Hayhoe, Rt Hon Sir Barney
Moate, Roger


Hayward, Robert
Monro, Sir Hector


Heath, Rt Hon Edward
Moore, Rt Hon John


Heathcoat-Amory, David
Morris, M (N'hampton S)


Heseltine, Rt Hon Michael
Moss, Malcolm


Hicks, Robert (Cornwall SE)
Moynihan, Hon Colin


Higgins, Rt Hon Terence L.
Mudd, David


Hind, Kenneth
Neale, Gerrard


Hogg, Hon Douglas (Gr'th'm)
Nelson, Anthony


Hordern, Sir Peter
Neubert, Michael


Howard, Rt Hon Michael
Newton, Rt Hon Tony


Howarth, Alan (Strat'd-on-A)
Nicholls, Patrick


Howe, Rt Hon Sir Geoffrey
Nicholson, David (Taunton)


Howell, Rt Hon David (G'dford)
Nicholson, Emma (Devon West)


Howell, Ralph (North Norfolk)
Norris, Steve


Hughes, Robert G. (Harrow W)
Onslow, Rt Hon Cranley


Hunt, David (Wirral W)
Oppenheim, Phillip


Hunt, Sir John (Ravensbourne)
Page, Richard


Hunter, Andrew
Paice, James


Hurd, Rt Hon Douglas
Parkinson, Rt Hon Cecil


Irvine, Michael
Patten, Rt Hon John


Irving, Sir Charles
Pattie, Rt Hon Sir Geoffrey


Jack, Michael
Pawsey, James


Jackson, Robert
Peacock, Mrs Elizabeth


Janman, Tim
Porter, Barry (Wirral S)


Jessel, Toby
Porter, David (Waveney)


Johnson Smith, Sir Geoffrey
Portillo, Michael


Jones, Gwilym (Cardiff N)
Powell, William (Corby)


Jones, Robert B (Herts W)
Price, Sir David


Jopling, Rt Hon Michael
Raison, Rt Hon Timothy


Kellett-Bowman, Dame Elaine
Rathbone, Tim


Key, Robert
Redwood, John


King, Roger (B'ham N'thfield)
Renton, Rt Hon Tim


King, Rt Hon Tom (Bridgwater)
Riddick, Graham


Kirkhope, Timothy
Ridley, Rt Hon Nicholas


Knapman, Roger
Ridsdale, Sir Julian


Knight, Greg (Derby North)
Rifkind, Rt Hon Malcolm


Knight, Dame Jill (Edgbaston)
Roberts, Wyn (Conwy)


Knowles, Michael
Rossi, Sir Hugh


Knox, David
Rost, Peter


Lamont, Rt Hon Norman
Rowe, Andrew


Lang, Ian
Ryder, Richard


Latham, Michael
Sackville, Hon Tom


Lawrence, Ivan
Sainsbury, Hon Tim


Lennox-Boyd, Hon Mark
Sayeed, Jonathan


Lester, Jim (Broxtowe)
Scott, Rt Hon Nicholas


Lilley, Peter
Shaw, David (Dover)





Shaw, Sir Giles (Pudsey)
Townsend, Cyril D. (B'heath)


Shaw, Sir Michael (Scarb')
Tracey, Richard


Shelton, Sir William
Tredinnick, David


Shephard, Mrs G. (Norfolk SW)
Trippier, David


Shepherd, Colin (Hereford)
Trotter, Neville


Shepherd, Richard (Aldridge)
Twinn, Dr Ian


Shersby, Michael
Viggers, Peter


Sims, Roger
Waddington, Rt Hon David


Skeet, Sir Trevor
Waldegrave, Rt Hon William


Smith, Tim (Beaconsfield)
Walden, George


Speed, Keith
Walker, Bill (T'side North)


Speller, Tony
Walker, Rt Hon P. (W'cester)


Spicer, Sir Jim (Dorset W)
Waller, Gary


Spicer, Michael (S Worcs)
Ward, John


Squire, Robin
Wardle, Charles (Bexhill)


Stanbrook, Ivor
Warren, Kenneth


Stanley, Rt Hon Sir John
Watts, John


Stevens, Lewis
Wells, Bowen


Stewart, Allan (Eastwood)
Wheeler, Sir John


Stewart, Andy (Sherwood)
Whitney, Ray


Stewart, Rt Hon Ian (Herts N)
Widdecombe, Ann


Stokes, Sir John
Wilkinson, John


Stradling Thomas, Sir John
Wilshire, David


Summerson, Hugo
Winterton, Nicholas


Taylor, Ian (Esher)
Wolfson, Mark


Taylor, Teddy (S'end E)
Wood, Timothy


Tebbit, Rt Hon Norman
Woodcock, Dr. Mike


Temple-Morris, Peter
Yeo, Tim


Thatcher, Rt Hon Margaret
Young, Sir George (Acton)


Thompson, D. (Calder Valley)
Younger, Rt Hon George


Thompson, Patrick (Norwich N)



Thorne, Neil
Tellers for the Noes:


Thornton, Malcolm
Mr. John M. Taylor and


Thurnham, Peter
 Mr. Irvine Patnick.


Townend, John (Bridlington)

Question accordingly agreed to.

Bill ordered to be brought in by Mrs. Teresa Gorman, Mr. David Evans, Mr. Gary Waller, Mr. John Lee, Mr. Ron Davies, Mr. Tim Devlin, Mrs. Ann Taylor, Mr. Jim Marshall, Mr. Graham Riddick, Sir Michael McNair-Wilson, Mr. Den Dover and Mrs. Alice Mahon.

TAX RELIEF FOR HOUSEHOLD EMPLOYERS

Mrs. Teresa Gorman accordingly presented a Bill to allow tax relief on earned income in respect of the earner's employment of home helps, child minders and other workers in cases where such employment is essential to the earner's availability for work; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 30 March and to be printed. [Bill 91.]

Opposition Day

[10TH ALLOTTED DAY]

Balance of Payments and Interest Rates

Mr. Speaker: I must announce to the House that I have selected the amendment in the name of the Prime Minister.

Mr. Gordon Brown: I beg to move,
That this House condemns the Government's economic failure which has brought the highest interest rates, the worst trade deficit and the highest inflation of the United Kingdom's major competitors; is concerned at the rising number of business bankruptcies and redundancies and at the investment cutbacks in the run-up to 1992; deplores the further reductions in support for regional investment, research and development, and export help; and calls for an investment budget for industry and training.
Last Wednesday, the trade deficit doubled to £1·8 billion—a deficit of £1·5 billion in manufacturing and a deficit of more than £1 billion with Europe. Even after taking into account all the Government explanations, there is a deficit over the whole year of £1 billion with France, £2 billion with Italy, £3 billion with the Netherlands, £4 billion with Japan and more than £9 billion with Germany.
The deficit is not just in traditional industries, such as clothing and textiles—in which it was more than £1·5 billion—but in the high-technology industries too. For example, in electronics there was a deficit of £1·5 billion, in computers it was more than £1·5 billion, arid in information technology it was more than £3 billion.
The deficit announced last Wednesday is bigger and worse, as a share of our national income, than that of any competitor country. That deficit reflects the huge fall in the British share of world industry, despite all the ministerial claims that the position has stabilised. It is a deficit which has arisen because, during the past 10 years, manufactured imports have risen twice as fast as manufactured exports. It is a deficit that reinforces the need for Labour's approach: an industrial policy to invest in training, research and development; a policy in the regions to ensure exchange rate stability, by opening negotiations to join the exchange rate mechanism; a budget for investment to help bring interest rates down; and a commitment to a British export drive.
Instead, we have a deficit with western Europe and even with some eastern European economies, such as Russia, East Germany, Hungary, Romania and Czechoslovakia, but not, of course, with Bulgaria and Albania—at least, not yet.
The deficit was dismissed and written off in 1987 as due to freak figures, a blip or changes in the customs procedures. As it gathered pace in 1988, it was dismissed as the result of cross-Channel strikes and a sign of growing investment in Britain. Even when the deficit reached £20 billion in 1989, it was explained away as due to excess demand, then to excess investment, and to a surge in investment. It is a deficit that has already brought the traditional Government response to embarrassing economic problems—the proposal to cut the publication of the figures. No doubt, after 23 changes in the relevant definitions, this problem can be made to disappear too.
Last Wednesday we were told that the deficit was due to "erratics". That is the special factor in January—erratics in our trade. When the import figures are published next month, no doubt the special factor will be that Perrier is back.
The Secretary of State for Trade and Industry believes that, by means of the market, the deficit is self-correcting. The Minister for Industry believes that Labour is exaggerating. The Under-Secretary of State for Corporate Affairs tells me, in the months that the deficit doubles, that it is improving by leaps and bounds. The explanation is—erratics. however, the real erratics are lined up before us. In case Ministers want to use the term again, I refer them to a dictionary definition of "erratics":
geological anomalies…the stranded relics from a bygone age.
What does the Under-Secretary of State for Corporate Affairs say about the deficit? On 1 February, speaking to that most challenging of audiences, the Cheltenham Conservative Association Patrons Club, he said:
Labour has got its timing wrong again. In the last six months Gordon Brown has gone on and on about the balance of payments, totally oblivious to the fact that the figures have been improving by leaps and bounds.
After another year of similar monthly improvements by leaps and bounds, we really shall be finished. I must caution him about talking in the grand language of leaps and bounds, when it was a mere blip that proved to be the undoing of the last Chancellor of the Exchequer.
The trade deficit is not a temporary difficulty of the last few months. It is a major problem that has been created over the last 10 years, as Britain moved from a manufacturing surplus of £2·7 billion to a deficit of £18 billion.

Mr. Tim Smith: Why does the hon. Gentleman not quote some of the other figures that were included in the official statistics published last week? Why does he not tell us about the underlying trend—that imports are no longer rising, while exports are rising by 15 per cent. in volume? How much better than that does he think a Labour Government could do?

Mr. Brown: I am genuinely surprised that the hon. Member for Beaconsfield (Mr. Smith) should believe that a £20 billion deficit last year and an £18 billion deficit this year represent a triumph. When I looked at the figures for last month, I found that imports were increasing while exports were decreasing, that manufactured imports were increasing and that manufactured exports were decreasing. If the hon. Gentleman regards a trend that will leave us with a £15 billion deficit in manufactured goods as a success story, that shows just how limited the Conservative party's ambitions now are.
Never in our trading history, until this Government, have we recorded a manufacturing deficit. Never have so many industries has such big deficits for so long, with the result that we are falling behind many of our major European competitors. Instead of a Secretary of State for Trade and Industry, we have a Secretary of State who is promoting Japanese trade and German industry. We want a Secretary of State for British trade and British industry.
The deficit reflects an even bigger problem that this Government have failed even to address during the last 10 years. While manufacturing employment has risen in

Japan and fallen far more slowly in other countries, it has fallen by 27 per cent. in Britain. Moreover, manufacturing output, which rose by 30 per cent. in America and 40 per cent. in Japan, has risen by only 13 per cent. in the United Kingdom during the last 10 years. Manufacturing output has fallen throughout the last 10 years in metal goods, mechanical engineering, motor vehicles, drink and tobacco, textiles, man-made fibres, clothing, footwear and leather—all that, in the old workshop of the world.
Perhaps the greatest failure of all is that manufacturing investment has moved up only very slowly during that 10-year period, while it has risen far faster in all our competitor countries, including a 40 per cent. rise in Japan.

Mr. John Maples: The hon. Gentleman said that part of the Labour party's policy for reversing the balance of payments deficit would be to negotiate to join the exchange rate mechanism of the European Monetary System. At what exchange rate does he think we should join?

Mr. Brown: The exchange rate that is best at the time for British industry. Does the hon. Gentleman expect the Chancellor to tell him what the right exchange rate is at the moment? I am talking about a negotiation—[Interruption.] The hon. Member for Lancaster (Dame E. Kellett-Bowman) should take this problem a bit more seriously. I am talking about a negotiation to enter the European monetary system, out of which will come the proper rate that is best for British industry. But an exchange rate that moves from DM3·20 to DM2·60 and then to DM2·80 is not what British industry wants.
After 10½ years of this Government, after the £65 billion which the Government have had in oil revenues, £23 billion from privatisation sales and another £20 billion from land and other sales, after all the promises, all the claims, all the boasts that our problems would be solved, and after all the sacrifices that the people have made, people ask why it is Britain, not our competitors, that has the biggest trade gap, the worst inflation and the highest interest rates. What sort of transformation is it when we see inflation at 3 per cent. in Germany, 3·5 per cent. in France, 2 per cent. in Japan and moving towards 8 per cent. in Britain—higher than any of our major competitors? Yet it was Britain that was promised zero inflation by its Government.
After all these years, when we have had all these claims of an economic miracle, Germany is growing by 3 per cent., France by 3 per cent. and Japan by 4·5 per cent. this year, but we are lucky if we are growing by above 1 per cent. What is the excuse, when Germany has an interest rate of 8·5 per cent., France 11 per cent., Japan 7·5 per cent., but we in Britain still have 15 per cent., after months of sacrifices by millions of home owners hit by rising mortgages and thousands of small businesses squeezed by high interest rates? Yet it was Britain that was supposed to be enjoying an economic miracle. How, after 10 years, can we explain this failure?
I have here an important speech which was made last Tuesday but which the Government machine seems to have overlooked—a speech by the Leader of the House, made possible by the terms of his new position as deputy Prime Minister, which gives him the time, and indeed the solitude, in which to reflect on past errors. What does he say in this speech, in this barely audible voice from his


internal exile? What is he trying to tell us in this account of a day, or perhaps just an hour, in the life of Geoffrey Denisovich? He asks
why, after 10 years, there are trade deficits.
He says:
We need to ask why in some very basic, low-tech fields, let alone high-tech ones, there are trade deficits that really do not need to exist.
Worse still, he presumes to answer with a confession: because we have paid insufficient attention to manufacturing industry. Manufacturing industry, he says, needs
more priority, socially and economically".
He goes on:
We need to place success in manufacturing higher on our national scale of priorities.
He says that manufacturing
is an indispensable dynamo of a successful modern society.
He goes on to say that we need Britain
enhancing its manufacturing fire power in every sector
and that improvement in the manufacturing balance is
a key part of the task ahead for the nation.

Mr. Philip Oppenheim: No doubt the hon. Gentleman is aware that manufacturing output has increased under this Government. Would he also confirm or deny that, during the course of the last Labour Government, manufacturing output fell?

Mr. Brown: The hon. Gentleman seems to forget that growth overall, taken year by year, on average was higher under the last Labour Government, even when we were faced with major oil problems. If the hon. Gentleman wants to talk about telling the truth, let me remind him of what he said to his electorate in Amber Valley in 1987:
The Conservative Government has put an end to fast rising prices once and for all.
I return to the speech of the deputy Prime Minister. In October, when he addressed the Conservative party conference he talked about the importance of manufacturing; in January, he criticised our manufacturing failures; now, in February, he calls for a manufacturing strategy to innovate, invest and internationalise.
Three times now, he has denied the Prime Minister, not a bit for the spot to be vacated by the Secretary of State for Wales, but a speech of penitence. The leading zealot of the first wave of the Thatcherite revolution is reappearing 10 years on as an embittered dissident. After some blinding revelation, there was an astonishing conversion somewhere on the road to Dorneywood. There is no longer an economic miracle, a supply-side transformation or a trade deficit of no consequence. After 10 years, there are no longer any answers from the deputy Prime Minister, there are no solutions, only questions. Where there was certainty, there is now confusion; where there were promises, there are now excuses; where there was truth, there is now admission of error; where there was hope, there is now disillusionment; and where there were answers, there are now only questions.
Where do the Government stand now, with the Secretary of State for Wales clearing his desk? The last remaining supporter of an industrial strategy in the Cabinet is now preparing to leave the Cabinet to spend more time with his family. The former Secretary of State for Employment called our training failure mind-boggling, and then quickly left to go back to his family. Now even the deputy Prime Minister is semi-detached. Who are left carrying the torch onwards? The Secretary of State for Trade and Industry and the Prime Minister, the last two

survivors of the glad, confident morning, are now the last devotees of a threadbare faith, the Darby and Joan of the last faltering months of the Thatcherite revolution tottering downwards towards the sunset and their inevitable fate. Yet those are the people who told us they had created an economic miracle.
What does the Secretary of State for Trade and Industry propose now? When the nation believes that he has gone too far, he is still seized of the view that he has not yet gone far enough. We should remember that the Secretary of State for Trade and Industry came to his Department with something of a reputation as the author of what used to be called the flagship policy—the community charge—and as the Minister who advised the nation that if they wanted an alternative to tap water they should drink Perrier.
What does the right hon. Gentleman's Department propose when businesses are going bankrupt at a very fast rate; when there have been more redundancies and closures in the past weeks than in many years of the 1980s; when businesses are reeling from what the Government admit in official figures is a 67 per cent. increase in interest rate charges facing businesses, with winding-up petitions reported to the Lord Chancellor for the last quarter up by 46 per cent.; and on top of that, there is a long-term investment gap facing our country?
Even with North sea oil, we are investing a smaller share of our national income in ourselves than most of our competitors over a decade. The training gap has grown, with more young people leaving school early without qualifications. There are more people in our work force with no major qualifications. There is a research gap and a regional gap, with the economies of the north growing at half the rate of the economies of the south.
What does the Secretary of State for Trade and Industry propose? Instead of helping to bridge the regional gap, there will be a 26 per cent. cut in regional arid industrial support, which will fall by £100 million to 1993. Instead of helping to bridge the innovation gap with our competitors, there will be a 4 per cent. cut in support for industry, including innovation, which will fall by £30 million to 1993. Instead of helping to bridge the research gap, there will be a 23 per cent. cut in general industrial collaborative projects, a 10 per cent. cut in advanced technology programmes, and a 3 per cent. cut in the research and technology organisation programmes. Instead of acting as a partner with industry to bridge those gaps with our competitors, there will be cuts in the Department of Trade and Industry budget totalling 27 per cent.
The right hon. Gentleman has been running down his responsibilities, with the ultimate goal of creating the first Department in British history devoted to doing absolutely nothing. Sunrise industries are looking in vain for help from that sunset Department, which is not so much open for business, in the language of his predecessor, as subject to a closing down sale.
We have a Secretary of State who believes genuinely that it will be better for industry when the last civil servant refuses the last export credit to the last struggling manufacturer in the land. It is the invisible hand guiding the invisible Department. It is not only a Department that does nothing but a Department with an ideological commitment that nothing shall be done. He is a Minister with more of a past, I am afraid, than a future. Nothing suggests the short-termism of his Department—

The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Nicholas Ridley): The last thing I want to do is spend more time with my family—[Interruption]

Mr. Brown: I do not know whether that is a promise or a threat. With the experience of the Secretary of State for Wales and that of the last Secretary of State for Employment, I was beginning to believe, until the right hon. Gentleman spoke, that the Conservative party had become the party of the family.

Mr. Thomas Graham: Is my hon. Friend aware that the people of Scotland would like the Secretary of State to spend more time with his family? Is he further aware that, in the working men's and unemployed people's clubs, the right hon. Gentleman is known as a Minister who works like two men, Laurel and Hardy?

Mr. Brown: If the Secretary of State wishes to stay on, I am sure that the electorate will shortly disappoint him. Nothing suggests the short-termism of his Department better than the right hon. Gentleman himself. Last year, it was the Water Bill. Next year we shall have the water colours. He is a Minister here today, his Department gone tomorrow. He is totally oblivious to the immediate problems that industry faces with high interest rates.
When the whole nation outside the Cabinet—and even the deputy Prime Minister, it seems, inside it—recognises that the trade deficit is a problem; when the consensus is that an industrial strategy is required; when the capacity of our industrial base is an issue causing increasing concern; when there is a clear need for a budget for industry; when the CBI is telling the Government to put investment before personal tax cuts; and when the Engineering Employers Federation and others have a joint budget submission demanding that attention be given to the problems of industry, our complaint against the Government is not just that they preside over the highest interest rates, the worst inflation and the biggest trade gap of our major competitors. It is not only that to have a consumer boom without adequate sustained long-term investment in our capacity was bound to be unsustainable and lead to the problems that we now face, sucking in imports, causing pressure on interest rates and creating inflationary bottlenecks. It is that, worst of all, the Government have no policy for Britain other than to repeat the mistakes that they have already made.
We are talking about a do-nothing Budget this year, a give-away Budget next year, another expansion of credit, another short-term consumer boom and another Lawson boom under a different name, but again, all without the necessary investment in training, research and capacity. It is a do-nothing year—merely an interval between making the mistakes and repeating them. We have a Government who do not respond to the economic cycle now but are dominated by the electoral cycle. When we need a Budget for skills, for technology and for investment to build for the future rather than to paper over the cracks of the present, our fear is that we shall be subjected to a Budget not to invest for the nation for tomorrow but simply to tide things over for the Tory party today.
Let us consider the problems that anybody charged with responsibility for the industries of this country should address—first, research and development. When Britain already spends only half as much a year on civil research

as Germany and France, when we have half as many scientists pro rata in our work force as Japan and Germany, when market forces have clearly failed to produce the goods in the last 10 years, and yet when in Britain the Government are spending half what the Germans spend on innovation, with a smaller share of our national income being spent for that purpose than in France, Denmark, Italy and the Netherlands, what have the Government done?
The Government have abolished the micro-electronics support programme, the opto-electronics scheme and the single industry support schemes, they have cut support for innovation which, according to The Engineer magazine, has "fallen sharply" in electronics and in information technology, and even last year, they spent less than they promised to the House. They spent only £440 million instead of £510 million. There is less and less and less under this Government. If we could not succeed in many of the newest industries in the 1980s with minimal support, how are we to succeed in the new technologies of the 1990s with next to none?
The same is true of the regions. When unemployment rates in the north are still twice those of many regions in the south, when, even on the Government's own indicators, only 20 to 25 per cent. of the extra small businesses have come to the northern parts of the country, when only 30 per cent. of venture capital is coming to the north as well, and when high-technology employment has fallen in the regions, except Wales, what do the Government do? They cut spending further and further on regional development support. They even spent less last year than they said that they would in the published figures. They refuse to listen to the sensible demand coming from the regions that there be effective development agencies and enterprise boards to create new opportunities and technologies.

Mr. Roger King: Will the hon. Gentleman solve a problem for me? He has mentioned regional development and regional aid. One way to establish that aid is to have an adequate road system. The Government have pledged themselves to improving our road system and the CBI has asked for that in its document "Trade Routes for the Future". The Government have adequately funded a road system programme, revolving over 10 years, at a cost of £12 billion. Why is it Labour party policy, as laid out by the hon. Gentleman's hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott), to abandon the "crazy" road spending programme?

Mr. Brown: I fear that the hon. Gentleman deliberately seeks to misunderstand what my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) says. My hon. Friend has drawn attention to yet another imbalance in the Conservative party's approach to the affairs of our nation. The Government refuse to invest in rail in the same way as they invest in roads. We want to achieve a proper balance in our infrastructure.
When I talk about the importance of regional policy, Conservative Members would do well to take into account the fact that railways are extremely important to the development of the regions, as is investment in new technologies and in training. We must ask ourselves whether the Germans are cutting their industry budget,


whether the French are cutting their export services or whether the Japanese are cutting support for new technologies.
Is it not the case that all those countries are investing in the future in a way that this Government, by abandoning the responsibilities that the Department of Trade and Industry has traditionally undertaken, are not doing? We need assurances today from the Secretary of State, and I hope that he will give me specific and precise answers to my questions.
Will the Secretary of State guarantee that regional policy is not to be further dismantled on the road to being abandoned? Will he assure us that support for innovation will be no worse than in Germany, Italy, France and our other European competitors? Will he tell us that Britain will secure its share of collaborative funds for research and development? Will he assure us that there will be no further rundown, rationalisation or privatisation of the Government's responsibilities to industry? Will he tell us that he will introduce no further export charges for advice and support, because they debilitate the attempt of industrialists to succeed in the export markets?
What of exports, so important to the future of this country? What of the new trading opportunities before us in eastern Europe? The Hungarians, the Poles, the East Germans and the Russians are asking for information technology and we send them the hon. Member for Wokingham (Mr. Redwood). The East Germans ask for up-to-the-minute technical know-how and we send them the Earl of Trefgarne. The Poles and Hungarians are asking for farming technology and we are sending them the Minister of Agriculture, Fisheries and Food.
Later this year, the Americans will give billions of dollars in new aid as part of a package. The French are buying into major enterprises, and the Germans are sending trade missions, often involving the whole boards of major companies. In the next few weeks, the British are sending them the Secretary of State for Trade and Industry.
Is it not tragic that, just at the moment when we should be considering how to build trading links to last over the years, we seem more interested in exporting dogma than goods and services? Where we have deficits, not only with western Europe but with eastern Europe, surely it makes no sense to cut export services, to cut the Export Credits Guarantee Department, to cut many of the services that, traditionally, have been performed by the Department of Trade and Industry, and to charge businesses that can ill afford to pay because of high interest rates.
At the end of almost 11 years of this Conservative Government, the best that we can hope for is that inflation will fall to about 6 per cent. at the end of the year—although the Government used to promise that it would come down to zero. The best that we can hope for is a trade deficit which, we understand from official figures, will be about £15 billion—something unheard of before this Government came to power. The best that we can hope for is that interest rates will slip down by 1 or 2 per cent.—but they will still remain the highest among our major European competitors.
During these past 11 years, the Government have failed even to address the long-term problems that they claimed to have conquered during the first five-years. They have squandered £65 billion of oil revenues with no thought of tomorrow. That is the meaning of short-termism.
What will be their excuses now? They cannot say that they need more time, because they have already had 10½ years. They cannot say that markets alone will deliver the goods, because for 10½ years they have not. They cannot say that they are the victims of international economic problems, because our competitors have had to face the same problems and many have done better. They cannot blame the burdens of interventionism, because it is lower in Britain than in other countries. They cannot blame an over-regulated labour market, because they claim to have led the way in deregulation.
Who is left to blame—the Churches, Brian Redhead, the left-over intellectuals of the 1960s, the Archbishop of Canterbury or the West Oxfordshire Eighteen? The truth is that, having blamed everyone else, the Government have no one left to blame but themselves.
Our complaint is not simply that, for more than 10 years, the Government have been unfair and unjust—charges that may not especially concern them; it is that, on the economic issues, on which they asked us to judge them and for which all the sacrifices have been made, they have been hopelessly inefficient and terminally incompetent. All that is left are the short-term electoral expediencies of short-term Ministers in a Cabinet dominated by 10 years of short-termism—thankfully, with only a short term to go. They are running out of oil, they have run out of ideas and they have even run out of excuses. Now time is running out for them.

The Secretary of State for Trade and Industry and President of the Board of Trade (Mr. Nicholas Ridley): I beg to move, to leave out from "House" to end of the Question and to add instead thereof:
congratulates Her Majesty's Government on policies which have achieved the highest rate of economic growth in the European Community, the largest increase in manufacturing productivity of any major industrial country, and record levels of industrial output, investment and exports; welcomes the continuous fall in unemployment for 42 months, and the creation since 1983 of nearly three million jobs in the United Kingdom; and commends the resolve of Her Majesty's Government to bear down on inflation and to continue with the supply side policies which have contributed to these achievements.
I rather enjoyed the speech of the hon. Member for Dunfermline, East (Mr. Brown). It was a good Dunfermline high school debating society effort, but it did not contain a grain of Labour party policy. I advise the hon. Gentleman to spend more time with his family, because he is wasting it here. His ignorance was demonstrated by the advance notice of today's debate which he tabled last week, in which he referred to the balance of payments deficit. He should know that payments balance, so there cannot be a deficit on the balance of payments.
The hon. Gentleman based the debate on one month's trade figures. How often has it been said by Ministers of all parties that one month's figures are of little value as an indicator of trade performance? It is the trend that matters. The total value of our overseas trade each month—visible and invisible—is about £35 billion. So purely random movements of 2 or 3 per cent., which are common, can move one month's current account balance either way by many hundreds of millions of pounds. These random movements tend to cancel each other out over a long period, which is why it is the trend that matters.
Moreover, single consignments can distort a whole month's figures. The hon. Gentleman referred to the erratics. I think that he got it right: the quotation from the dictionary referred to geological oddities of a bygone age. Curiously enough, in this case they are. They are diamonds which are re-exported at considerable profit to the country. In January, 400 million-odd were imported.
The monthly figures, which cause the hon. Gentleman such glee when poor figures are first published, are subject to considerable revision when more complete information becomes available. For example, the originally published December deficit of £1,100 million, which we regarded as unnaturally low at the time, has now been revised down to £800 million. Perhaps that will convince the hon. Gentleman of the folly of constructing an elaborate edifice on one month's figures. He is keen to run Britain down when the figures appear bad, but he is not to be seen anywhere when they are revised upwards and show a better picture.
I return to the trend, which is healthy. Export volume in the last three months, excluding oil and erratics, was 4 per cent. higher than in the previous three months, while import volume was 1 per cent. lower. Compared with a year earlier, there is an even more striking result: export volume is up by 11 per cent. and import volume is up by only 2 per cent. There is no doubt, on the basis of those figures, which the hon. Gentleman is not listening to, that the trend of both exports and imports, including the January figures, is firmly in the right direction.
The Opposition may not like it if I give too much good news, but the value of our visible exports in 1989 was 14·4 per cent. higher than in 1988. Among the high spots were a 95 per cent. increase in exports of telecommunications equipment to the United States and a 75 per cent. increase in exports of road vehicles to Japan, to more than £150 million last year. That is a turnabout. Exports of road vehicles to all destinations increased by 33 per cent. Exports of iron and steel since privatisation rose in value by 36 per cent. My right hon. and hon. Friends will note with satisfaction that excellent evidence of rapid recovery in three major industries which were mutilated by the interventionist policies of the right hon. Member for Chesterfield (Mr. Benn) in the 1970s.
I fear that I have to disappoint the hon. Member for Dumfermline, East.

Mr. Ian Taylor: The figures that my right hon. Friend has given of the improving trend of exports as against the fairly static level of imports surely justify the conclusion that the country had a problem not because of competitiveness but because of the surge in demand domestically. Therefore, that entirely justifies the Government's policy of increasing the cost of money to bear down on demand.

Mr. Ridley: My hon. Friend is right, unlike the hon. Member for Dunfermline, East. The problem is that, great though the increase in production is, the surge in demand has overtaken it.
I fear that there is more good news. It looks as if the encouraging trends will continue, both in exports and in imports. In 1989, our exporters almost certainly increased their share of world trade, despite what the hon. Gentleman alleged. The prospects are good for expansion

of the volume of world trade itself. The Industry Act forecast last November predicted that the volume of world trade would expand at the healthy rate of 5 per cent. in 1990, with the volume of world trade in manufactures expanding at 6·5 per cent. If our exporters maintain or increase their share of world markets, as they are doing, that will mean further healthy export growth. Export order books are good and are growing. Export opportunities will grow even more rapidly if we have a successful conclusion to the Uruguay GATT round, a topic which the hon. Gentleman has never mentioned. I do not think that he even knows about it.

Mr. Giles Radice: When the Government came to power, there was a balance in manufacturing between exports and imports. In 1989 there was a £17 billion deficit. How does the right hon. Gentleman explain that? Does it matter? If it does, what is he doing about it?

Mr. Ridley: The hon. Gentleman missed the fact that, in the early 1980s there was a considerable surplus. For one of the very few times in our history, we had a surplus of visible trade, excluding oil. These matters go up and down according to the success of industry, and we can now see the growing success of British industry which I have described.
Against those successes, and against the huge opportunities for us to trade in the world, the hon. Member for Dunfermline, East excelled himself in an article in The Mail on Sunday 10 days ago. He said that the solution for us all was to rush to eastern Europe and supply British high-quality consumer goods to the inhabitants of those poor countries so recently delivered from Socialism.
My first question is, why has Socialism not already delivered the goods? Surely it should have been supplying everyone with all the lovely products resulting from state intervention, state investment banks, nationalisation and national plans. The best thing for the hon. Gentleman to do is to hope that we will all forget that eastern Europe adopted the very policies that he advocates. If hon. Members want to see planning in action, they should go and stand in a bread queue in Bucharest, or put their names down for a telephone in Warsaw. Then they will see the results of policies like those of the Labour party.
The hon. Gentleman had the grace to admit in that article that east Europeans have no hard currency to pay for our goods—another first for Socialist economics. But he had an answer for that, too: it came to him in a flash of inspiration—barter. They could pay in radishes and raspberries, sauerkraut and slivovitz.
We have been trying to do barter trade with the eastern bloc for 20 years, which is why our trade with all those countries amounts to less than 2 per cent. Is that really all that the hon. Gentleman can suggest—to go back to the mediaeval system of barter, with failed Socialist economies? Or is it a forlorn attempt by him to exonerate the failure of Socialism in eastern Europe? I know that he does not like it, but he might as well take it. Those of us who have been here for a few years remember Lord Callaghan telling us in 1960:
I have not the slightest doubt that the economic measures and the Socialist measures which one will find in countries of Eastern Europe, will become increasingly powerful against the uncoordinated, planless society in which the West is living at present"—


[Interruption.] As some hon. Members were shouting and may not have heard that, with your permission, Mr. Deputy Speaker, I will repeat it:
I have not the slightest doubt that the economic measures and the Socialist measures which one will find in countries of Eastern Europe, will become increasingly powerful against the uncoordinated, planless society in which the West is living at present."—[Official Report, 15 December 1960; Vol. 632, c. 679.]
The noble Lord has become an older, wiser man. I hope that he will teach the hon. Gentleman the lesson that people in eastern Europe have learnt: Socialist economic policy results in economic disaster.
Our efforts here are directed towards helping the economies of eastern Europe to move towards a proper market system based on hard currency, private ownership, no plans, no intervention, and proper market pricing. The way for us to help is through major private investment. This is the message that my Ministers and I shall take to eastern Europe in our travels, and we shall be taking teams of senior business men with us to show how British industry can provide the practical help that Eastern Europe needs. Barter, my foot!

Mr. Bob Clay: If the Secretary of State is advocating no plans, no intervention and plenty of investment, can he explain why his Department and unelected officials in Brussels have, between them, refused to allow entirely private investors to buy shipyards in Sunderland so that they might build ships that are required and for which there are orders? These people are themselves shipowners and would require no state subsidy whatsoever. Will the Secretary of State explain why his Department intervenes only to prevent people in the private sector from investing in shipbuilding in Sunderland?

Mr. Ridley: The hon. Gentleman should address that question to the European Commission, which, quite rightly, seeks to enforce the agreement with us to make it possible to aid the hon. Gentleman's constituency through the enterprise zone and many other measures. These measures have been of far more value than would be the enterprise with which the Commission insists we do not proceed.
As I have said already, the trade deficit is the result of demand in the economy being in excess of productive capacity. Measures taken by my right hon. Friend the Chancellor of the Exchequer to curb excessive demand are working. This is clear from the trend in retail sales and in house prices. The slackening of demand is already reducing the growth of imports, and will continue to do so. The Industry Act forecast predicted that 1990 would see a continued fall in the rate of import growth. That, too, is being borne out. Industry is expanding and will have room to export more.
The trade deficit is still too high—there is no argument about that. But the deficit, high though it is, is not a sign of industrial weakness; it has arisen because demand has been growing even faster than production. Because they love to knock British industry, the Opposition, in the face of the evidence, cling to the allegations that the deficit is the result of weakness on the part of our industry.
So how is our "unco-ordinated, planless" industry doing? Manufacturing output is at record levels. Since 1981 it has risen by 32 per cent., not the 17 per cent. that has been quoted. In the period 1986–89, the volume of manufacturing output alone increased by 19 per cent. That

is not evidence of manufacturing decline. Nor do I take any lessons on the subject from the representative of a party whose last period of office saw an actual fall in the volume of manufacturing output.
Productivity in manufacturing industry in the United Kingdom has risen by almost 60 per cent. since 1980. That represents a rate of growth unmatched by any of our major industrial competitors, and certainly unmatched by any planned or co-ordinated Socialist Government anywhere. It is in sharp contrast with our record in the previous 20 years, when we were at the bottom of the league table for manufacturing productivity growth. In the early 1980s, there was an overdue correction of the heavy overmanning that had been brought about with the encouragement of the Labour Government, but in recent years a continuing strong improvement in productivity has gone hand in hand with an expansion of production. Could any of the credit for this be due to the Government's supply-side policies?

Mr. Graham: When the Secretary of State goes to eastern Europe, will he tell the regimes there that half of Scotland has lost more than half its manufacturing jobs since this Government came to power in 1979? In Strathclyde alone, more than 166,000 manufacturing jobs have been lost under the jurisdiction of this Government. That is an indication of the planning that will denude Scotland further and further until it is just one big estate for game hunting by the rich.

Mr. Ridley: I think that if I were to tell, say, the Poles what the hon. Gentleman has asked me to tell people in eastern Europe, they would be rather shocked. It is likely that the rates paid to people in Scotland who are on benefit are higher than the industrial wages paid to many people in Poland. The hon. Gentleman has no idea how lucky he is. Unemployment in Scotland is very low compared with previous figures, simply because so many new jobs have been created. [Interruption.] I did not say that. I said that those on benefit are probably better off than people in Poland who are in full-time work.
The decline in the profitability of industry through the 1970s was both a symptom and a cause of its difficulties. That trend has been decisively reversed. By 1987—the most recent year for which firm figures are available—the rate of return in manufacturing had recovered from 4 to 8 per cent. There is little doubt that it has risen further since, and it now stands at a level not seen since the 1960s. This enables three quarters of the funds for capital investment to be found from internal resources, thus enabling companies to invest despite high interest rates. Good profits help firms to raise more money through the stock market for investment.
The "unco-ordinated, planless" industry that we have has also had record investment. Opposition Members always lay great stress on investment. I suspect that the volume of investment is often of less significance than its quality and the efficiency with which it is exploited. Nevertheless, investment trends are also very encouraging. In the last seven years the growth of investment in the economy as a whole will have been twice as fast as the growth in consumption. Business investment has grown by 40 per cent. in the last three years alone. Manufacturing investment grew by 12 per cent. in 1988 and by 5·5 per cent. in 1989, and now stands at a record level. It takes a considerable amount of misplaced ingenuity to portray that record as failure.
The result has been a revival of industrial prosperity across the whole country. Unemployment has fallen for 42 consecutive months, and now stands at only two thirds of the European Community average.

Mr. Win Griffiths: rose——

Mr. Ridley: I know that these figures are not popular with the Opposition, but they had better listen to the truth. Unemployment has fallen for 42 consecutive months, and now stands at only two thirds of the European Community average. It has fallen sharply in every region. We have the highest level of employment in our history—26·5 million people in jobs. Is the hon. Member for Dunfermline, East ashamed of our success in helping his constituents to a better life? The largest percentage falls in unemployment in the past year have been in Scotland, Wales and the North.
Since March 1986, the combined unemployment rate in the north-east, the north-west, and Yorkshire and Humberside has almost halved—from 15·9 to 8·4 per cent. In Dunfermline, the unemployment rate has fallen from a high of 17·7 per cent. to the present figure of 10·1 per cent. Why did not the hon. Gentleman mention that to his constituents in the tear-jerking account of his hardworking week that was published in The Guardian on 3 March? We all felt particularly sorry that he had to catch the 7.30 train to Newcastle—a train on which I travel frequently. I am sorry that he was so inconvenienced by having to make a speech there.

Mr. Win Griffiths: I acknowledge that unemployment has fallen over the past 42 months. Nevertheless, in all the standard planning regions north of the line from the Severn to the Wash, over 660,000 fewer men are employed today than in 1979, and in Wales 60,000 more men are out of a job. Is not that a sad comment on the current state of affairs? There is a huge disparity in the development of the economy: there are 305,000 extra jobs for men in the south-east, and 660,000 more men unemployed in the north and west.

Mr. Ridley: I cannot confirm all the hon. Gentleman's figures off the top of my head, but I believe that unemployment in Wales alone has fallen by 23 per cent. over the past year. What the hon. Gentleman has drawn to our attention is the migration from the north, Scotland and Wales to the south that has taken place over the past few years. I hope that that trend is now reversing; I believe that it is.
The Government's policies are spreading prosperity across the nation. That is why the old arguments about the north-south divide are heard so seldom now, except when the hon. Member for Dunfermline, East tries to keep them alive. The truth directly contradicts what he said: the north is now experiencing faster economic growth than the south, and doing better than the south.
The story is of record increases in production, productivity, exports, profits, investment and employment. Of course there is more to do, but the hon. Member for Dunfermline, East ought to first acknowledge that the 1980s have probably been the best years for British industry since the 1880s. He prefers to go on griping, however.
Labour says that there is not enough training and not enough investment, and that too little is spent on research and development. The hon. Gentleman asked about research and development: let me give him the details for 1987, the most recent year for which I have figures. As a percentage of gross national product, private sector investment in research and development was 1·8 per cent. in West Germany, 1·9 per cent. in Japan 1·1 per cent. in the United Kingdom and 0·9 per cent. in France. The hon. Gentleman got the figures wrong; our investment is not less than half that of Germany, and it is more than that of France. Of course the investors could do better, but this is not a poor performance.
The hon. Gentleman complained that there are too many takeovers, and that industry suffers from short-termism. It is the Labour party which is suffering from short-termism; it wants to take advantage of any quick trick that it can find to fill up a Supply day debate. I agree with the hon. Gentleman that we need to continue carrying out our task of improving the country's record of training. He ought to know that the Government are setting up training and enterprise councils to improve training—involving expenditure of some £2·5 billion a year—but he did not mention it.
Foreign investors know what a favourable climate the United Kingdom provides for manufacturing enterprise. In the past 12 months, major new investments have been announced by Bosch, Toyota and Fujitsu. Digital Equipment has expanded its operations in the north and in Scotland; Reinhagen of West Germany has invested in Coventry, Murata of Japan in Plymouth and Koyo Seiko of Japan in Barnsley. Nearly 40 per cent. of United States investment in the Community, and one third of Japanese investment, comes to Britain. West German firms have invested more in the United Kingdom than in any other Community country. Inward industrial investment is running at a rate of £4·5 billion a year. There is the evidence that industry thrives on Britain's "uncoordinated, planless" environment. If it is good enough for Japanese, Germans and Americans to invest and manufacture here, why is it not good enough for the hon. Member for Dunfermline, East?
Inward investment has had other benefits for the British economy. I am sorry that the hon. Gentleman has not acknowledged them, but I was heartened by an article by Victor Keegan in The Guardian last week, which spelled out the success of such investment. I agreed particularly with Mr. Keegan's point that overseas production and managerial techniques had had a catalytic effect on British industry. There can be no doubt that foreign investment is leading to improved product quality and management in British industry.
The motion refers to interest rates. Of course high interest rates are unwelcome to private borrowers; of course they have an impact. Their purpose is to make saving more attractive and borrowing less so, and thus to reduce the pressure of the excess demand that was properly identified by my hon. Friend the Member for Esher (Mr. Taylor).

Mr. Graham Allen: Will the Secretary of State give way?

Mr. Ridley: No, not now.
Inflation is by far the greater evil, and it is absolutely right for us to place its defeat at the top of the agenda. The


main impact of high interest rates is on people with mortgages. I sympathise with them, for I know how difficult things are for them.

Mr. Allen: Do you?

Mr. Ridley: Can the hon. Gentleman explain why so many Labour councils have chosen such a difficult moment to impose such extravagantly high community charges? If the Labour movement cared anything for the people who are suffering from the high mortgage rates, it would have done its utmost to moderate the charges rather than stoking up the problem.
We should not exaggerate the effect of interest rates on business. First, it is less the cost of borrowing than the availability of attractive investment opportunities that determines the scale of new investment. When investments yield returns of 25 to 30 per cent., as some do, borrowing at 10 to 15 per cent. still makes good sense. Secondly, while short-term and variable interest rates have risen sharply, interest rates for fixed-rate finance at medium and long term remain substantially lower. That is often the form of finance best suited to the needs of a manufacturing enterprise.

Mrs. Alice Mahon: Will the right hon. Gentleman give way?

Mr. Ridley: No, I will not.
Finally, the cost of interest rates must be set against other business costs. On average, the cost of a 1 per cent. rise in interest rates is far lower than that of a 1 per cent. pay increase, but I have not noticed the hon. Member for Dunfermline, East and his hon. Friends protesting at some of the excessive wage demands made recently by their friends in the trade union movement; nor do I entirely understand why the Confederation of Shipbuilding and Engineering Unions is determined to push through high wage claims if it is worried about the effect of high interest rates on business.
The hon. Gentleman and his colleagues persist in the belief that there is some other, painless way of controlling inflation. I am glad to see that the right hon. and learned Member for Monklands, East (Mr. Smith) is present: although I may not list all his silly ideas about controlling credit, I shall pay him the compliment of quoting his suggestion that my right hon. Friend the Chancellor should appeal to the banks' sense of civic responsibility in an attempt to limit undesirable lending.
If the Government feel that they must intervene in the economic life of the country, surely they should do so overtly, through legislation that will be subject to the scrutiny of the House. It is no good lecturing people. I cannot believe that homilies from my right hon. Friend, or any other Minister, on the virtues of abstinence will be treated like tablets of stone in company boardrooms. The right hon. and learned Member for Monklands, East may think that lecturing business men over breakfast goes down well, but precious few of them tell me that they want directions from Whitehall on how to run their affairs.
Does the right hon. and learned Gentleman also propose to appeal to the civil responsibility of lenders in Germany, the United States, Japan, Bermuda and the Cayman Islands? Does he intend to preach to them about undesirable lending? No doubt they would take up any business lost by British lenders who were foolish enough to listen.
It is time to jettison all those ideas, just as the hon. Member for Dunfermline, East has firmly jettisoned the silly ideas put forward by his hon. Friend the Member for Dagenham (Mr. Gould). What has happened to Labour's plans for a payroll tax, which threatened British industry with an extra £1 billion tax bill? What has happened to Labour's plans for a co-ordinated, planned British investment bank and a range of regional and local investment banks? I am quoting from Labour's policy review. What has happened to the no-dividend policy for utilities?
Will the hon. Member for Dunfermline, East tell the House now, because he did not tell us in his speech? None of those policies is mentioned in Labour's recent "Industry 2000" document. As the hon. Gentleman seems shy of talking about his own policies, I shall tell his right hon. and hon. Friends why there is no mention of them—it is because he has ditched them. If he had not, he would tell us about them. I am willing to give way to the hon. Gentleman if he wants to say that he has not ditched those policies. I have answered lots of questions, so will the hon. Gentleman now be kind enough to answer just one? What has happened to the economic and industrial policies advocated that his hon. Friend the Member for Dagenham put before the nation? Has the hon. Gentleman ditched them or not? It seems that we cannot even have an answer to that question.

Mr. Roger King: My right hon. Friend knows that the hon. Member for Dunfermline, East (Mr. Brown) allowed me to intervene in his speech, for which I am most grateful. I asked him about the Labour party's roads programme and about the commitment that has been given by his hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) that that programme for that essential part of the United Kingdom's infrastructure is regarded by the Opposition as so important to our economic viability that they would scrap it. The hon. Member for Dunfermline, East said that they did not mean any such thing. I refer my right hon. Friend to the fact that on 14 February the hon. Member for Kingston upon Hull, East said:
We would not follow the crazy road programme that the Government have embarked upon."—[Official Report, 14 February 1990; Vol. 167, c. 300.]
Does my right hon. Friend agree that Opposition Members are putting forward a recipe for disaster, congestion and economic bankruptcy?

Mr. Ridley: The role of the hon. Member for Dunfermline, East in these matters is to run along behind his colleagues with a blanket. Whenever any shadow Minister makes a policy commitment, the hon. Gentleman runs along to deny it. He hides it by drawing the blanket over it. The Opposition have to move the hon. Gentleman around every few months so that he can clear up all the messes left by his colleagues. That applies equally to his hon. Friends the Members for Kingston upon Hull, East (Mr. Prescott) and for Dagenham.
Perhaps the shadow Chancellor will tell us what has happened to the payroll tax. He should know. Is it still Labour party policy? Will the right hon. and learned Gentleman please tell us the solutions?—[HON. MEMBERS. "Come on."] The Opposition are long on diagnosis, but short on prognosis. I have only one question. Have the measures outlined in Labour's policy review been ditched. or not? Just yes or no—[HON. MEMBERS: "Come on."] I


rest my case. Indeed, I have no case to answer, because no alternative strategy has been put forward. I commend the Government's amendment to the House.

Mr. Alan Williams: After that speech, the only people with any reason to hope are the Secretary of State's family. The hon. Member for Eastbourne (Mr. Gow) once said that the Secretary of State is the most brilliant Minister in the Government. I remember commenting then, when I looked at the official Box, that even the men in the white coats were laughing. Today they would have been in tears.
Today we have heard the wisdom of Ridley—that there is no deficit and that if we ignore it, it will go away because it is an illusion. He said that there can be no such thing as a deficit on the balance of payments. Believe it or not, the person sitting on the Treasury Bench performing his mimicry at the Dispatch Box is what passes as the Secretary of State for Trade and Industry in this Government. It is no wonder that we have such problems and no wonder that the solutions are all irrelevant.
To listen to the Secretary of State one would think that he had invented inward investment. He forgets that 15 per cent. of British industry and commerce was overseas-owned in the 1970s and that traditionally we have been a host country for inward investment. We have always welcomed it. With my colleagues in government at the time, I negotiated to bring Hitachi to Bridgend and Aberdare, Toshiba to Cornwall and Aiwa. All those negotiations were carried out under that Labour Administration and others were carried out by previous Conservative Administrations. All Governments have welcomed inward investment, and the Secretary of State should not try to create the impression that it has arisen only since 1979.

Mr. Jeremy Hanley: When in our history has inward investment been as high as it is today?

Mr. Williams: I am coming to that point. On the eve of 1992 and just after big bang, of course, there is an influx of investment throughout Europe—not just into this country. I shall come to that point in a little while. Much though I am tempted by the right hon. Gentleman's trivialisation of everything, which tends to bring out the worst in us, I shall not respond like that because the subject is too serious for us to talk in those terms. The right hon. Gentleman spoke about needing to look at the trend. He is absolutely right—I wish that he had. That is what I should like to do. I wait to get away from the knockabout rubbish to which we had to listen for almost half an hour and put the debate into a different and, I hope, wider context.
Like most hon. Members of all parties—even if Conservative Members will not admit it—I sincerely believe that there is an underlying, long-term, profound structural imbalance in this country. In part, it is buried by the political trivia that we bandy among the different parties, but it has also been submerged in the short-lived smokescreen of the oil revenues of the past decade.

However, even with the £128 billion revenue from oil, ominously we still have a deficit of £20 billion over the decade as a whole.
We must remember that the problem is not just today's problem. It is an underlying one. I do not want to tempt the right hon. Member for Henley (Mr. Heseltine), who I am sure will want to make his own speech later, but he will recollect trying to grapple in the 1970s with exactly the problem that we are talking about today. We have had an underlying imbalance in British trade since the end of the second world war. In only three years in the period 1948 to 1974 has Britain managed to achieve a surplus in visible trade. The surpluses that we traditionally earn from manufactures were normally outweighed by the import of raw materials because at that stage Britain's only raw material was coal and we were importing up to half our foodstuffs. That imbalance stretches back even to before the last war and into the last century, when we were the workshop of the world. Our balance of payments has always been held by invisibles. It is important to establish that point.
It was because of the erosion of those invisibles during the war—when our shipping ended up at the bottom of the Atlantic and our overseas investments had to be sold to buy food and armaments—that since the war various Administrations have wrestled with the problems of the balance of payments—except for that one short transitory period of oil revenues. Since the war we have been dogged by the consequences of that problem—the old stop-go syndrome of which we are all well aware. It is because oil has blurred our perception of the British malaise for 17 years that the Secretary of State did not address that problem properly today.
From 1973, when OPEC began its fivefold increase in oil prices, the perception of the problem changed. Suddenly everything was good because our oil started to flow. During the 1980s all of us, or at least Conservative Members and too many people in the country, wallowed in a false sense of security. The flow of oil from the North sea—£128 billion-worth of it—is a short-term finite asset. It conceals the long-term underlying weakness in Britain's trading economy. That weakness has been made worse—but again concealed by the oil—by the 20 per cent. destruction of the manufacturing base by the end of the 1970s. That it was easily concealed by glib Ministers.
Throughout the decade, the impact of the underlying trade weakness has worsened. As my hon. Friend the Member for Dunfermline, East (Mr. Brown) said, the manufacturing surplus of almost £3 billion in 1979—in current terms it would be over £5 billion—has deteriorated into a £16 billion deficit now. That is a turnround on the manufacturing trading account of £21 billion.
In the 1980s, the oil flow produced a genuine difference of political opinion about how the resource should be used. A clear division was already emerging before the 1979 election. I remember the debates before the election on industry, policy and so on. Labour Members had a different view of what we should do with the bonanza, the short-term finite resource that would become available to us. Our view was embodied in the industrial strategy, which was anathema to Conservative Members. The concept was simple. It was that we should take that short-term, limited resource out of the North sea and use it to invest in manufacturing, new technology, education


and training to prepare ourselves for when the oil was no longer there. Conservative Members may have disagreed with it, but they understood it clearly.
The Government's strategy was different. They believed that, traditionally, invisibles had held the balance and that invisibles could do it again. They believed that manufacturing could be ignored. I remember the present Chief Secretary to the Treasury accusing us of being dewy-eyed about manufacturing. He would not dare to make that statement today.
The Government made a legitimate but wrong-headed decision to rebuild invisible trade rather than build the physical capability to produce and sell goods. They removed exchange controls. I shall not enter into that argument, because it was simply a means to an end. The outcome of the Government's strategy was that, during the oil decade, there was a net outflow from Britain of £41 billion. Some of it went in loans and some in hard, direct investment. At the end of 10 years of pursuing that strategy, one simple arithmetical fact remains: the extra revenue from outward investments—the invisibles at the heart of the Government's strategy—are not enough to cover the drop of £21 billion in manufacturing trade. We have a gap which did not exist before.
Until this Government came to power, traditionally we had surpluses on manufacturing. The deficits were on raw materials and foodstuffs. We had surpluses on invisibles and manufacturing. Now we have a surplus only on invisibles, which is not enough.
If the Secretary of State had remained to listen to the next speech, which is the usual courtesy in the House——

Mrs. Mahon: He is not a courteous man.

Mr. Williams: I recognise that he is not noted for it.
The Secretary of State may say that there was direct outward investment to build factories and secure markets. The direct inward investment about which the Government boast is only half the amount of our direct outward investment. We have created factories, capacity and jobs in other countries at double the rate at which other countries have used their resources to create jobs and capacity in our country.
One must bear it in mind that the aim of direct outward investment is often to secure a market overseas—for example, in Australia. Once a company has found a good market, it is understandable that it may want to secure it by investing in a local plant. That is clear industrial logic, but we must understand the consequence. There is an outflow of capital. We lose exports because goods are produced locally. We lose jobs because they are not needed here. We probably lose the profits too, because, unfortunately, British companies do not do what the Government say they should do. They do not repatriate profits to provide the invisibles to pay for the deficit on real goods—[Interruption.] If Conservative Members want to sit there and chunter, that is up to them. They are welcome to intervene.

Mr. Ian Taylor: rose——

Mr. Hanley: rose——

Dr. Keith Hampson: There is some inconsistency in what the hon. Gentleman says. Labour Members constantly preach that in Europe there are not

enough level playing fields to allow British capital to take over European companies. The hon. Gentleman sounds as though he is not interested in that process.

Mr. Williams: I was pointing out that overseas investment makes sense in many circumstances. The basic strategy deliberately adopted by the Government—the right hon. Member for Henley (Mr. Heseltine) was party to the decision—was to ignore the industrial side and concentrate entirely on invisible overseas investment as a way of securing the future balance of payments. They ignored the enormous impact that will be felt when oil eventually runs out.
As oil runs out and the revenue from it falls, we shall return to the stop-go process and our invisibles will clearly be incapable of fulfilling their traditional role. They cannot offset the enormous deficit on visible trade. We shall return to stop-go, but not with a balance of payments surplus like the last time. We shall return to the stop-go process with a £20 billion deficit on payments. We shall return to stop-go awash with hot money. We are so awash with hot money that a mere blip—to use the Government's word—a few weeks ago caused £3 billion to flow out across the foreign exchanges and as a result we had to support the currency.
The Government are in a political quandary. It happens to be an unfortunate time in the electoral calendar and the Government need growth before the next election. So we have the Chancellor of the Exchequer and the Prime Minister like two first world war generals planning another dash at the wire, another dash for growth. They hope that the dash will carry them through the election and they can bury the dead on the other side. Whichever side of the House makes up the stretcher party after that election and dash for growth will have dramatic problems with which to contend.
But today's overriding question goes beyond that. With a record balance of payments deficit, historically high interest rates and so much hot money washing about in the economy, will the Government even get as far as the wire?

Mr. Michael Heseltine: The right hon. Member for Swansea, West (Mr. Williams) has done us all a service. His speech was thoughtful and comprehensive, embracing a coherent strategy on how to attempt to run an economy. To paraphrase what he said, there was the once-and-for-all bonanza of North sea oil and "we"—I assume he meant the Government of which he hopes to be a member—will be able to use that money for a once-and-for-all investment process for the greater benefit of the British people. That shows the difference between the Opposition and the Government. The weakness in the Opposition's case is that they have no idea how to use the money, which they would have confiscated through high taxes from the people who had extracted the oil from the North sea.
It is precisely because Governments the world over do not have the sophisticated mechanisms for investing money for profit that the system described by the right hon. Gentleman does not work. Socialism fails because it misuses resources in its hand. It is the marketplace that finds the probable investments, and that is what the Labour Government, had they been in power, would have denied—the proper effective disposition of resources.
The seriousness of the right hon. Gentleman's speech, with the conclusions of which I wholly disagree, was in stark contrast with what I think he described as the "knockabout rubbish" of the speech of the hon. Member for Dunfermline, East (Mr. Brown)—which was funny. By any standards in the House, it was extraordinarily funny, and the better the jokes, the more apparent it became that he had absolutely no policy contributions to make. If this country wants to be run on the basis of inspired humour and the odd wit of Opposition Members, it has today seen what lies over the edge of the abyss.
The hon. Member for Dunfermline, East was quite specific about what he wanted to do. He wanted to introduce a Budget for investment to bring down interest rates. We were led to understand that that commitment was at the top of his list of priorities. He did not tell us what the Budget would contain to bring down interest rates. Bringing down interest rates would mean cutting the level of demand in the economy. As my right hon. Friend the Chancellor eloquently put it, "If it ain't hurting, it ain't working." The hon. Member for Dunfermline, East did not say where he would impose the pain necessary to get a grip on inflation.
The hon. Gentleman then moved on to the second broad sweep of policy. I wholly agree with many of the sentiments he expressed, but then, all hon. Members would broadly agree with them. He argued for more education, training and research and development. He would be the first to say that those are essentially long-term policies. It is no use thinking that, if we say that we are going to put £1 billion into education, the kids will be in the factories within 24 hours, changing the nature of the performance of British industry. It is a long-term policy. With research and development, we must start with a gleam in the eye, work through to the application and then the product emerges.

Mr. Gordon Brown: indicated assent.

Mr. Heseltine: The hon. Gentleman is generous enough to agree with me.
With training, we have to start the process, find people to do the training and set up the facilities, and, in five to 10 years, we will probably get a greater output of trained people. The hon. Gentleman and I are at one on that, but there is a lacuna in his argument. If, when he and his party were in power, they were doing all the training, education and investing in research and development, why did the economy fall apart when they left power? We should have been the beneficiaries and inheritors of that great legacy, but they had done none of those things.
The third, and by no means the worst, item of the hon. Gentleman's agenda for change is regional policy. If I understood him correctly, the implications of his speech were that the northern parts of our economy work less effectively than the southern parts, and a little bit of subsidy here from central Government to stimulate a little bit of job creation there, will change things in a way that all Governments since the war have failed to do. However, there is a small problem for the hon. Gentleman——

Mr. Allen: The right hon. Gentleman tried it when he was Secretary of State.

Mr. Heseltine: No. The hon. Gentleman says that we tried it. The Labour Government did something quite different. In their regional policy, they spent a few hundred million pounds from the centre to the regions while they took billions of pounds from the regions in the south-east in one form of subsidy or another to the City of London and the pension funds.
What do the Opposition think they achieved with the capital gains tax that destroyed the family businesses of the north? What do they think they achieved when they subsidised pension funds to take the money out of the wealth-creating companies to institutionalise them in the City of London? What did they think they achieved when they gave the publicly quoted companies of the south of England the privilege of taking over the businesses in the midlands and the north with tax incentives? Where did the power go from? From the north. Where did the power go to? To the south. When the communications explosion of the 1980s took place, where did it take place? Where the head offices were. Where were they? Down here. Why? Because they had been driven out of all parts of peripheral Britain by the Labour party. That is what has happened.
The fourth argument of the hon. Member for Dunfermline, East—his cri de coeur to my right hon. Friend the Secretary of State for Trade and Industry—was, "Give me this one hope." The hon. Gentleman's message was, "Let there be no more restructuring of British industry." I have heard that before. That was the essence of nationalisation—remove the industry from the initial owners, subsidise it, protect it, prevent it from being changed, do not let it diversify, ossify the economies around the country's periphery, and then expect those economies to compete.
That is what the hon. Member and his party achieved. When the market winds blew, the subsidised, nationalised industries were the first to shed the horrendous number of jobs which, if they had been changed and diversified when the economy was prosperous and growing, would have resulted in much less pain and much more benefit. It took the Conservative party to face up to that, and it is because the Opposition have learnt nothing that they must remain what the hon. Gentleman made them today—an eloquent, uproarious joke, fit for opposition but not for government. [HON. MEMBERS: "What about Jaguar?"] Hon. Members know it has already been sold to the Americans.
I wish to speak about the central issue to which my right hon. Friend the Secretary of State for Trade and Industry referred—the battle against inflation. Conservative Members understand that that is the battle we must win. I am grateful that the Chancellor is here today. He and my right hon. Friend the Secretary of State should seriously consider the first act of nationalisation in the post-war world—the nationalisation of the Bank of England. The Government have achieved wonders by working back through the corridors of history and privatising most of the major nationalised industries. It is curious that we did not concentrate on the first act of nationalisation, that of the Bank of England. We all know that it cannot be privatised, but there is every conceivable reason why we should seek to distance the Bank of England from its current relationship with the Government.
I say that for two reasons. First, the battle for inflation is an institutional and a psychological battle. It is of critical importance that the people, the politicians and the wage negotiators of a country know what is the overriding priority of a nation, and that has to be the battle against


inflation. If, as with the German, American and Swiss banks, the central bank is distanced from the Government, everybody knows that the only way in which politicians can change the influences on the value of money is by direct and open direction through a bank that is likely to resist it. That is a huge sanction. There would be no diminution in the sovereignty of the House, because it would be easier for the House to detect the process that was at work, and the power built into the central governor's position would have a major stabilising impact in the direction that I have described.
Secondly, whatever one might consider to be the likely effects of German unification, we are moving, driven by treaty, towards the completion of the single European market. One of the major benefits of that market is not just the removal of the structural inhibitions between the 12 countries: it is the enhanced confidence that can come from the investment profile of a much larger and more stable home market, a market that enables Britain, within a partnership of Europe, to stand on all fours with the United States or Japan. One method of achieving that is to obtain a degree of monetary stability in the wider market place.
The debate is increasingly becoming one of sovereignty, and there are no ways in which, in logic and in the ultimate, that issue can be avoided. But in the first stages towards a more co-ordinated market, the European monetary system and the disciplines of the exchange rate mechanism, no unacceptable loss of sovereignty is involved in moving into such a mechanism. But one would preserve that sense of national independence if we saw it happening coincidentally with the establishment of a central independent bank in Britain.
We should suggest to our European partners that they should all establish independent central banks on the same model as the Bundesbank, operating to the disciplines of the Bundesbank. Let us have no illusions about that: the disciplines of the Bundesbank are precisely those to which we are all committed. It is precisely because it has been so successful, and the deutschmark so powerful, that all of us recognise that either it will make it on its own, dominating the European economic marketplace, or there will be some arrangement within which we conduct a dialogue; in other words, we have access to the top table.
A way in which that could be achieved without loss of national sovereignty would be if an independent team of hankers, operating to the same disciplines as the Bundesbank, were established in the national capitals, acting coherently as a council of central bankers.
It would be perfectly possible for any country to opt out of the exchange rate mechanism or not to attend the meeting of the council of central bankers if it wanted to. But if one did not attend, it would become apparent that one was worried about the disciplines themselves and, in leaving the central mechanism, one would lose the underpinning of the exchange rate mechanism itself, so there would be a price to be paid. But if the central management of a national economy is such as to justify such a removal from the mechanism, one will pay that price in any case, so the important point is to establish disciplines which bind us into the highest standards, which are those of Europe, the deutschmark and the Bundesbank.
It is apparent from what we have heard in the House today that the alternative policies of a putative

Government are those of yesterday, with no understanding of the changes that are coming. But for Britain the 1990s will be more traumatic and the change more far-reaching than is yet perceived. We shall deal with the rationalisation of industry and commerce on a scale that is relevant to the competitive challenge of the modern world only if we get inflation under control and if we have disciplines that are equal to the best in Europe. That is something that only the Conservative party understands and has the will to achieve.

Mr. Doug Hoyle: It was interesting to hear the right hon. Member for Henley (Mr. Heseltine) making his alternative bid for the leadership. He decried what the Labour Government did, but he should look at his own record. It takes a little more than a garden centre to revitalise Liverpool and it will take a little more than the creation of a hankers' club in Europe to revitalise Britain's economy.
The right hon. Gentleman's perspective of the history of Germany is not the true one. German industry was resurrected by the United States and Britain because of the fear of Communism at that time, and the bank followed that. If we followed the path proposed by the potential leader of the Tory party, we would not be much better off than we are under its present leadership.
Time is running out for British industry. It is faced with high interest rates which, according to the CBI, are now six points higher than they were in 1988 and which have already cost British industry £3 billion. That is the burden that is being carried by British industry. In addition, because of the deficit in the balance of payments, British industry faces the prospect of a further rise which will have grave consequences for our economy. It will push us towards deflation.
We have heard a lot about 1979 and the Labour party, but in 1979, when the Labour Government left office, investment in manufacturing industry was 3·6 per cent. of GDP. Today it is 2·7 per cent. and falling. Where do we stand in relation to our competitors? If we wanted to equip ourselves for 1992, the single European market and the increased competition that will follow, we would have to invest 50 times as much in manufacturing industry. Only that would create anything like a level playing field in our relationship with the Germans or the Japanese.
The same applies to research. We spend a lot on research into defence, but in research into civil manufacturing, we lag behind our competitors. Again, we would have to spend 50 times as much to bring us up to the German level. That is the sort of battle that we have to face. We are completely ill-equipped to face what will happen in the single market.
We hear from Conservative Members and the Secretary of State that all is well; if so, why are our scientists and engineers leaving Britain in droves? Recently, I organised a petition of scientists abroad which we presented to the Prime Minister. If the projects were available to them, those scientists would sooner be here, but the projects are not available because we are not spending our money on them.
The same applies to training, which is almost non-existent. We are training people for low-skilled, low-waged, low technology jobs. We should be training people for highly skilled, high-wage, high-technology jobs


if this country is to cope in the future. The Government are pursuing the folly of short-termism, of not looking ahead to the future, and we shall all pay the penalty for it.

Mr. Allen: They will not.

Mr. Hoyle: No, some of them will not. Some Conservative Members will be here, but a lot of those who have been shouting vociferously today will not be here after the next election to tell us that they have learnt their lesson and by God they will kick. Already many of them are kicking about the poll tax.
Many of our problems result from the fact that the Government abolished training courses and boards and since then there has been no training. Why is better training given in France? Because there is a levy on industries employing more than 10 people, of 1·2 per cent. of the payroll. They are producing skilled people, but we are certainly not doing that in this country. In Germany—another of our major competitors—90 per cent. of school leavers enter apprenticeships or equivalent training leading to qualifications. Contrast that with what is occurring here. Do we wonder that Germany, France, Japan and the United States are so far ahead of us?
What will save us? Who is going to rescue us? Look at the Front Bench team for the Department of Trade and Industry, and the Secretary of State himself. We heard his blundering, bumbling speech today. The Secretary of State is noted for disasters—if he had lived in another era, he would have been the captain of the Titanic. Then there is the Minister for Industry, who thinks he is a latter-day Perry Mason. The only problem is that he rarely wins a case. He has just managed to close the most modern shipyard in this country, in Sunderland—at a time when the Japanese are expanding shipbuilding and when the yard was beginning to come back. Should we not use the skills of workers in Sunderland to build ships? But the Minister for Industry caved in.
I am sorry that the Under-Secretary of State for Industry and Consumer Affairs is not here. If ever I saw a Sunday car boot salesman, the Minister for Consumer Affairs is that man. Unfortunately, the Under-Secretary of State for Corporate Affairs is not with us either. I am sorry that he has gone, because he even makes the Deputy Prime Minister seem charismatic. With him, when one switches on the television set, nothing appears and there is a voice over. These are the people who are supposedly going to save British industry; it is a bleak day when we have to depend on them.
Will those people have the vision and imagination to look to the future? Of course we all know they will not. We should intervene more in the free market economy, and strengthen the powers of the Department of Trade and Industry, but what is the Secretary of State doing? Between one Woodbine and the next, he is destroying those powers, and our immense problems remain.
Apart from the challenges arising in 1992 from the single market and increased competition, we are living in a world where armaments are decreasing. Where are the plans to change our defence industries to peaceful civil production? They just do not exist. The Government have shown no imagination as to how we can do that.
In the United States—the home of the free market economy—they realise what is needed and they are already

beginning to do it. Hughes Aircraft, for example, which was 80 per cent. dependent on defence contracts has reduced that proportion to 60 per cent. and representatives of the company told me that they would scale it down to 40 per cent. What is the plan for Britain?
Obviously, the only way that we will meet the challenge of the future is by co-operation between industry, the Government and the financial institutions—if we all begin to pull together, to plan for the future and to bring forward what Conservatives used to be pleased to tell us were the sunrise industries. Under the Conservatives, they have become sunset industries. There is a huge deficit in the balance of payments for information technology, and it is getting worse, not better.
The Chairman of the Select Committee on Trade and Industry, the hon. Member for Hastings and Rye (Mr. Warren), is in his place. He will agree with my comments because we published a report on information technology, in which we drew attention to the problems. But it will not be acted upon. The Conservative party disregards anything that needs intervention.

Mr. Eddie Loyden: Does my hon. Friend agree that there has been a great deal of intervention by the Government in local government and trade unions and that the functions and democracy of those bodies have been constrained by the Government?

Mr. Hoyle: I could not agree more with my hon. Friend. The Government have attacked the wrong targets. Instead of strengthening local government in the regions to enable them to bring in industry, and allowing the trade unions to play a part in the changes that are occurring, they have set out to destroy them.
As long as the Conservative party is in charge, with this sorry and motley crew at the Department of Trade and Industry, and with a Prime Minister who believes in the free market, we will be unable to meet the challenges of the 1990s. What is needed is a new team, with a fresh outlook, fresh policies and fresh thinking. That is the way forward, and I hope that it will not be too long before we get that change.

Sir William Clark: I am sure that the whole House enjoyed the excellent speech by my right hon. Friend the Member for Henley (Mr. Heseltine). He was quite right to draw attention to overmanning within nationalised industries, which was one of the reasons why our economy got into such a muddle and a mess. He could have gone on to say that the problem was not only overmanning in nationalised industries in the 1970s, but the power of trade union leaders at that time.
I am sure that, if hon. Members on both sides of the House reflect, they will agree that trade union intransigence was responsible for killing off the car industry, the steel industry and the shipping industry and consequently——

Mr. Loyden: And lack of investment.

Sir William Clark: It was not lack of investment. The trouble was that the nationalised industries were overmanned, and their productivity was very low. The Government have curbed the powers of the trade unions, but it takes time.
I agree with my right hon. Friend the Member for Henley that, although we enjoyed the knockabout speech of the hon. Member for Dunfermline, East (Mr. Brown), it really was a joke. Although pressed, he did not even refer to the Labour party's policy.
Industry is tougher and fitter than it was 10 years ago. The Opposition laugh at our achievements. All that pleases them is bad economic news. They rejoice in it. By their continual talk of gloom and doom, they are doing down the British economy, to its detriment. It is time that Opposition Members—certainly those who sit on the Front Bench—referred to the achievements of the British economy. It is on those achievements that the standard of living of every man, woman and child depends.

Mrs. Mahon: Will the hon. Gentleman give way?

Sir William Clark: No, I have only just started my speech.
My right hon. Friend the Secretary of State for Trade and Industry referred to the new businesses that have been set up. Since 1979, manufacturing production has grown by 13 per cent. in real terms. That is a good achievement. Efficiency has increased. Compared with 1979, the average production of employees has increased by nearly 60 per cent. Investment and exports have also increased.
Until 1986, we had a trade surplus, but during the last three years we have been in deficit. There are various reasons for that. First, our standard of living is higher. Consequently, consumer demand is much greater. Secondly, higher company profits allow companies to reinvest. Thirdly, demand has increased.
The Opposition do not seem to appreciate the underlying strength of our overseas assets. Since 1979, our net overseas assets have increased from about £25 billion to just over £100 billion. Our gold and dollar reserves stand at $38·5 billion. If we compare last year's exports performance with this year's, we see that exports have increased this year by 11 per cent., while imports have increased by only 2 per cent. That may be said to be too high, but if we compare a three-month period with the comparable period last year, we see that exports increased by 4 per cent. while exports dropped by I per cent. Exports per head in the United Kingdom are much higher than exports per head in Japan. We should talk about such achievements.
Private expenditure is slowing down, but there is still some way to go. The housing market has slowed down, and in many cases has gone into reverse. Consumer spending has come down. Therefore, inflation will eventually come down, too. Many of our imports are capital goods. They represent over 50 per cent. of our deficit. Millions and millions of pounds are being invested by the Japanese in our car industry, but it will be a few years before production comes on stream. Consequently, increased car production will be shown in the trade figures only in 1991. Companies are expanding, and there is more and more import substitution.
My right hon. Friend referred to research and development in the oil industry. No taxpayers' money has been invested in the oil industry; it has been developed solely by private enterprise. Nobody likes high interest rates, but——

Mr. Harry Ewing: The hon. Gentleman will have to admit that the tax regime for the companies that extract oil from the North sea is very generous. There

are various ways to give subsidies to companies. One way is to set a generous tax regime. That is precisely what happened with North sea oil investment.

Sir William Clark: I am a consultant to an oil company. Under the tax regime, the tax paid by oil companies is extremely high.

Mr. Ewing: indicated dissent.

Sir William Clark: It is no use the hon. Member shaking his head.
It is said that high interest rates are the only way to reduce inflation, but the control of public expenditure also helps. The Government have been extremely successful in holding down, and reducing, public expenditure. When we came to office, it was about 43·5 per cent. of the national income. Next year, it will be about 39 per cent.
The hon. Member for Dunfermline, East shed crocodile tears for people with mortgages because of the high interest rates that they have to pay. That is a turnaround for the Opposition. At one time, they did not like home ownership. It is only public opinion that has caused them to change their minds. I agree that the first-time buyer is suffering from the high interest rates, but that hardship is temporary. However, there is no reason why the second-time buyer should not rearrange his mortgage commitment so as to be able to make the same monthly interest repayments. We must keep all this in perspective.
Reference has been made to the number of people in arrears with their mortgage interest repayments and to the number of repossessions. The fact is that 8 million people have mortgages, of whom only 58,000 are in arrears with their mortgage interest repayments. Therefore, nearly 99·25 per cent. of home owners are up to date with their repayments. There have been about 13,780 repossessions. High interest rates are not responsible for all of them. I understand that over half are due to marital difficulties.
The Opposition did not say much about credit controls and how a Labour Government would control the 85 per cent. of borrowing which is on mortgages. How would that credit be controlled? The Labour Government introduced credit controls in 1970, which resulted in an average inflation rate of 15·5 per cent. My right hon. Friend the Secretary of State asked how one would deal with the overseas banks—the Chase Manhattan bank, the Tokyo bank and so on. It is pie in the sky. In Australia, where there is a Socialist Government, the inflation rate is 20 per cent. However, the Prime Minister of Australia has stated categorically that under no circumstances would he introduce credit controls, because they would be useless.
My right hon. Friend the Member for Henley referred to the establishment of an independent bank. He suggested that all the members of the European Economic Community should have a national bank. However, I very much doubt whether the 12 EEC countries would agree to that. We must be practical about a national bank and also about joining the European monetary system. There are certain limits within which currencies can rise or fall within the European monetary system.

Mr. Austin Mitchell: The hon. Gentleman means the exchange rate mechanism.

Sir William Clark: Yes, the exchange rate mechanism; I think all hon. Members knew what I was talking about.
One of the problems is that we have not yet seen and cannot envisage the difficulties regarding the deutschmark


when there is monetary union between East and West Germany. We do not know whether unification will happen, but it looks as if monetary union will come fairly soon. Whatever the exchange rate between the ostmark and the deutschmark may be, the consumer demand and spending capacity against the Bundesbank will be increased, because people in East Germany, who at the moment cannot spend their ostmarks outside that country, because they are useless, will create, if they swap them for deutschmarks, consumer demand against the deutschmark. Consequently, inflationary pressures will come into play with a unified monetary system in Germany.
With regard to industry, of course we have difficulties and of course there is concern, but I sincerely believe that the two elements of my right hon. Friend the Chancellor's strategy—high interest rates and control of public expenditure—will do the trick. It will take a few months, but industry is leaner and fitter today. The cash flow of companies is much improved. In 1980, bank borrowing by companies was 45 per cent. of the value of equity; in 1987, it was 28 per cent.; today, it is probably very much lower, because the position has improved since then.
The hon. Member for Dunfermline, East would not answer any questions. My right hon. Friend asked him about the payroll tax, and he would not answer. He was then asked about the national investment bank, which is another way of directing investment that the Labour party is very keen on. Then there is the question of what happens to dividends of industries that have been privatised. All these things have come out in policy documents, but they are not being spoken about.
My right hon. Friend suggested that they were being ditched. I think he is being very kind about that. I do not believe that they have been ditched at all; I think that they have been hidden in order to hoodwink the public into thinking that, if there were a Labour Government, all the nasty things in their policy document—payroll tax, national investment bank, control of dividends—would disappear. But that is not so. They would come in; there is no question at all about that. They have not been ditched—they have been hidden. It is a confidence trick on the public.

Mr. Matthew Taylor: I listened to the comments of the right hon. Member for Henley (Mr. Heseltine) with interest because he made a fascinating speech, in contrast to those made by Opposition and Government Front Bench Members. He made a devastating and, broadly speaking, accurate attack on the Labour party, making points rather more effectively than they could be made by quoting statistics for the 1970s and the 1980s. They went to the heart of the difference in economic approach and the effect that that had in the 1970s on the Labour party. But he also made a devastating attack on the Government because of the Prime Minister's unwillingness to see the need for an independent bank and for monetary disciplines other than interest rates. The direction in which he was heading there was an appropriate one.
The sad thing is that the right hon. Gentleman reminds me more than anything of a comet which, cast out into the cold from the centre of power, circulates around with

nobody to pay much attention to it and not looking terribly interesting for a while. Then, as it heads back towards the centre of power again, in the hope, perhaps, that it will take over from the sun, it attracts its little streamer of hangers-on anxious to hear what it has to say. Whether they will stick with it or float away again over the next year or so remains to be seen.
The situation that brought the right hon. Gentleman to the Chamber today is nevertheless a serious one. This was not adequately reflected in the speech of the hon. Member for Dunfermline, East (Mr. Brown), in which there were plenty of jokes but no meat, or in that from the Secretary of State, who gave his familiar contemptuous response but again failed to tackle the underlying problems that the country is facing. Both those speeches, but particularly the Secretary of State's speech, failed to reflect the concern expressed to me by business men, the Confederation of British Industry and, indeed, a whole range of people about the difficulties that the economy is in, and, therefore, that the Government are in. The climate of uncertainty and the lack of confidence in the Government's ability to manage the economy are among the root causes of our present problems.
That is one of the fundamental changes of the past few years. If there was anything that the Government depended on—this was something that they argued for in opposition and in the early years of government—it was confidence and certainty about Government strategy—that it could work, and that they meant it. The loss of that confidence in the anti-inflationary strategy—the loss of belief that the Government mean what they said about tackling the fundamental problems of the economy—led to many of the problems that we have faced and are facing.
We also have the well-grounded fear that inflation is on the way up again and that it could hit 9 per cent. in the next quarter. We have had pressure on sterling, even in the last few days. When the Secretary of State tries to dismiss the latest trade figures as merely an unfortunate erratic item. one cannot wonder that, whereas those in the City who study these matters swallowed that excuse in the short term, they clearly did not accept it once they had had a moment to think about it. There is now fear of a further rise in base rates to prop up the pound and curb inflationary pressure.
All these things go right to the heart of what the Government have always said they were about during the past 10 years. They also demand an adequate response from the Opposition parties. There is no advantage to the country or to the House in knockabout speeches that are high on public relations but failures on O-level economics. The paucity of policy from the Labour party raises serious concern about the job that it is doing. There is nothing wrong with the PR; there is nothing wrong with the argument; we can all agree with the argument. But it does not do for the Labour party to talk always of the long term, always of the things it wants to achieve, but never of the concrete reality of how to achieve them.
We have seen the trade figures putting pressure on the pound over the last few days. The January trade figures show that high interest rates are not working sufficiently to dampen the demand for imports. Whatever the Government say about erratic items, the truth of the situation is underlined by the January consumer credit figures, which show the highest increase in consumer credit on record. The figures show that consumer credit is not slowing but still expanding at 2 per cent. a month.
Although M0 and M3 have disappeared into the history books as measurements of what is happening in the economy, there can be no question but that real credit difficulties and the supposed interest rate policy pursued by the Government are mutually incompatible. If the Government's interest rate strategy was working, consumer credit should be coming under control. Even worse, wage inflation is further evidence that any slow down in consumer credit and later in inflation may well be only temporary as wage inflation pushes up the price inflation that the Government created only a couple of years ago. It is clear that consumer demand has not been satisfactorily brought under control, and reliance on high interest rates has not even begun to provide a proper answer.
Government policy and the disease afflicting the economy are starting to become one. High interest rates are crippling industry, and I have said that there are already fears of a further rise in base rates. Last year there was a 10 per cent. increase in business failures and, if high interest rates continue, bankruptcies will increase. The CBI quarterly survey in January reported a sharp fall in demand among large companies and a levelling of manufacturing output. It is not surprising that CBI surveys have shown that industry's intentions to invest are falling. Investment in plant and machinery is expected to fall. Of course Government investment has also fallen.
Although the Liberal Democrats have unequivocally supported the moves towards the single market and 1992, Government involvement in that process cannot stop with DTI posters announcing in franglais that the single market is here. The question on the posters, "Where are you?" might be better directed at the Government. The Government should tackle supply in the economy and long-term investment in research and development, transport and education.
The problems in manufacturing industry are already critical. Manufacturing industry is being starved of investment when many firms are already working at or near capacity. Many firms are held back by the lack of capital investment and skilled staff. The short-termism that that reflects—much of it related to Government policy—is the most serious and damning criticism of the Government. Solutions are available, and they have been proposed not only by the right hon. Member for Henley but by many hon. Members on both sides of the House, including many Cabinet Ministers, but they are resisted by the person in the strongest position to block them or push them through—that is, the Prime Minister.
Interest rates could be lowered without the problems that the Government fear if there were a commitment to joining the ERM by the end of the year. Unless that commitment is made, sterling will continue to fall as soon as interest rates are cut or confidence in the Government falls. We are not arguing for membership of the ERM as an easy solution—far from it. Our policies have tackled the problems and have addressed what would need to be done to avoid running into further difficulties. However, membership of the ERM would give industry a more certain environment in which to operate and would help to bring an end to the stop-go approach which has done so much damage to industry under Tory and Labour Administrations.

Mr. Austin Mitchell: I am sorry to postpone the hon. Gentleman's fascinating recital of fact, but when he says

that membership of the ERM will not be an easy solution, how hard does he envisage it will be? Will it be as hard as it was in France, where it managed to increase unemployment to 2·6 million, or in Italy where unemployment increased to 2·9 million? Will it be that hard for us?

Mr. Taylor: No. I meant that it would be hard in that the Chancellor would have to take measures to bring down the inflationary effects of joining the ERM and cutting interest rates. The hon. Gentleman performs a useful function in that, by opposing joining the ERM, he exposes the duplicity of Labour Front-Bench spokesmen. We have consistently argued that although Labour Front-Bench spokesmen like to talk about joining the ERM as an easy criticism of the Conservative Government, in practice, they have proposed a series of blocking conditions before they would be prepared to join it. The hon. Gentleman was obliging enough to point that out on another occasion by saying that he was prepared to support those on the Labour Front Bench because he was well aware that the conditions for joining that the Labour party was laying down could never be met.
Over the years we have missed opportunities that could have been provided by joining the ERM and bringing down interest rates. If we are not to miss future opportunities, the Chancellor should announce in his Budget that he will begin negotiations to secure our entry as soon as is practicable. The Budget speech could then be about cutting interest rates and tackling the problems of British industry, but it would also have to be a tight Budget to prevent demand from increasing and some of the current problems getting worse.
The Chancellor could do that in ways that were fair and responded to the need while redressing some of the inequities in the current tax system. The Chancellor should at least get rid of the national insurance ceiling and reduce mortgage interest tax relief to the basic rate. Those measure would be felt only by the better-off, who in many ways are most responsible for the current trade deficit. They would have a beneficial effect on imports and inflation.
We have also supported the CBI's call for the investment allowance to be raised from 25 to 40 per cent. to tackle some of the supply-side problems, although we would restrict that to new investment. That would encourage investment and would not be inflationary. The forthcoming Budget provides opportunities, if the Chancellor is prepared to be brave and imaginative and, most important of all, to do what Chancellors should do and not what Prime Ministers say. I hope that the Chancellor will overcome that difficulty. Once he has done that, he can start to tackle some of the fundamental supply-side difficulties, in transport, research and, above all, education.
I feel most strongly that we are selling the people of this country short on education and training. We all suffer and, in a sense, we all share the blame for under-investing in research and development, but we should not throw away the opportunities available to the younger generation. They depend on us for only one thing. They can make their own way later on, but they depend on us to give them the education and training that, we hope, will see them through most of the rest of their lives. We need to expand in-service training, but every child in education has one brief opportunity which is never repeated.
Any Government who let them down cannot put things right later, as there is no second chance for the children who are now in education and training. The skills shortages are with us now and the problems cannot be ovecome overnight, but if we do not make that fundamental investment, there will be no second chance. Therefore, we propose a series of policies that start to put people back into education and training of a standard that needs to be met and which is already offered in many of our competitor countries.
Not only do European countries educate in further and higher education more youngsters than we do, but countries such as Taiwan are producing per head of population more graduates than we produce. Our training schemes need improving. Youngsters under 18, even those in work, should have a statutory entitlement to further training.
Let us beware of those companies that feel that their time and energy can best be spent poaching the trained staff of other companies, rather than themselves doing the training. We would institute a remissible training allowance by which the economics of training would be weighted in favour of companies that believe in apprenticeships and long-term investment in their employees, and away from companies that think that it is quick, clever and easy to poach from other firms.
The Labour party has failed to spell out its policies on that and many other issues. I do not disagree with much of what Labour Members say about the need to invest long-term in training, education, research and development. But they must spell out how they would do it, for that is fundamental to getting it right. Time and again in debates of this kind, Labour Members have not explained how they would put their policies into practice.

Mr. Ian Taylor: In the days of studenthood, one was asked in The Observer mace competition to speak to a motion the wording of which one was given shortly before the debate. Judging from recent performances of the hon. Member for Dunfermline, East (Mr. Brown), a practised debater, one can only conclude that he was given the wording of the motion only after he had spoken. His recent speeches have been witty but totally devoid of detail about the policies to which he was supposed to have been addressing his remarks. That applied to his speech this afternoon.
The people of Britain deserve to know what policies the Labour party has to address the difficulties of the economy. It is no good Labour Members saying, "We wish we were not starting from here." The people must know whether it is Labour policy, for example, to remove the pain of high interest rates by forcing down interest rates regardless of other factors in the economy. If Labour would do that, we should soon return to the inflationary heyday of the last Labour Government, when inflation levels averaged 15·5 per cent., compared with the lower levels that the Conservatives have successfully maintained throughout the 1980s.
Unless Labour Members show that they appreciate why we were successful throughout the 1980s, it will be impossible for them to compose policies to address the problems of the British economy. They never talk about

the improvements that have occurred, for example, in the levels of productivity. They have not assessed the reasons why we have achieved massive job creation, the figures of which compare favourably with other members of the European Community.
Labour Members have not focused on the interesting investment figures for British manufacturing industry, which have been particularly strong in the capital goods sector, a factor which has contributed to the change in the balance of trade through import of capital goods. Labour Members do not talk about the number of new businesses that have been created—on a net basis, still running at over 1,000 a week. Nor do they talk about the supply side—the issues on which the new democracies in eastern Europe focus—especially our ability to abolish controls, which we have done progressively from 1979 onwards. None of that is part of official Labour party policy.
Nor have Labour Members welcomed, as Conservative Members have, the programme relating to 1992. I welcome to the Government Front Bench the Under-Secretary of State for Corporate Affairs, whose efforts in making sure that the 1992 programme continues have been applauded in the House and have made a major impact on the economies of this and other European Community countries.
Clearly, we were blown off course by certain international events in 1987. Indeed, had they not occurred we would not be facing many of the present problems. But the test of a firm Government is the way in which they react to those problems. World experts in 1987, particularly after the stock market crash, forecast a worldwide recession. That was the view of the pundits in the City of London. There was fair unanimity in this House about that, and in New York the pundits were speaking of the same problem.
Reflation—relaxation of monetary aggregates—was a natural reaction to those circumstances. Remarkably, the capitalist system did not collapse, as many articles in the quality press forecast. Indeed, the buoyancy of the capitalist system was remarkable, and we reacted wrongly. We predicted a recession and the failure of capitalism, but capitalism triumphed, although that had some unfortunate knock-on effects. The inflation that we had today—at levels of which the Labour party would have been proud when it was in office in the 1970s—was caused by that degree of monetary laxity, not by errors in budgetary management.
The budgetary side is being run on a basis of tight fiscal policy. We have a public sector surplus, which is a notable achievement. The problem was caused not by Goverment profligacy but by private sector domestic borrowing. The only credible response to that has been to increase the cost of money. The Conservatives have had the courage to introduce such a policy. The test of a Government is not that they never make a mistake—no Government have ever had that honourable distinction—but whether, having seen that a mistake has been made, they have the courage to correct it.
Once monetary aggregates had begun to relax, there was a tightening, even at the cost of short-term opinion poll difficulties. There is no doubt that the manifestation of the increased supply of money was the withdrawal of equity from booming property prices from 1987 to 1989. The correction of that relies on higher interest charges, but particularly the mortgage rate.
Although it is not politically easy to accept it, there is no doubt that recent decisions by building societies to increase their mortgage rates to a level even higher than base rates have had a welcome and direct depressant on the housing market at this stage, even though it is extremely painful. Many of my constituents have told me about that pain. But the Government must show that they can conquer inflation, and if inflation can be conquered, houses will once again prove a good long-term investment.
By having increased the cost of money, a positive effect is already evident. My hon. Friends have referred to the improving trend in export growth, and the figures are interesting. The figures for the last three months compared with the same three months of the previous year show that non-oil exports have risen by 11 per cent. against a static growth in imports. That means that the sharp rise in the balance of trade deficit reflected excess domestic demand—that we were sucking in imports faster than manufacturing industry and other industries could produce goods. It was not the fault of an over-valued pound. In other words, the competitiveness of the British economy is still sound. Our problem was that we had excess demand and we had to tackle it. It is clear that those inflationary pressures still exist.
There are special factors, which have been discussed, which will ensure that the level of short-term inflation stays high, although the underlying rate of inflation, if one excludes mortgage rates, is much lower and much healthier. The strange point about mortgate rates is that, although they increase the rate of inflation—the retail price index—they are a deflationary element. The mortgage rate is working in a conflicting way, so we must keep our eyes on the underlying rate of inflation.
With those inflationary pressures, what policy should the Government adopt? I do not advocate short-term changes in fiscal policy as a way of depressing demand. That is not to say that the Budget should not tighten fiscal policy. We shall see what happens. However, we cannot easily bear down on the total expansion of domestic demand by altering fiscal policy in major ways. That causes subsequent structural difficulties. Much academic research, including that by Alan Budd, has shown that, used to depress demand, fiscal policies take a long time to work through into the economy and have undesirable long-term effects.
We could set new monetary targets, which is a sensible policy. Monetary expansion, even in narrow money, is still worryingly high. However, to set such targets is, in itself, insufficient. Setting monetary targets has to be linked with a clear, objective guideline and a signal that the Government are pursuing a medium to long-term policy against inflation.
I encourage the Government, therefore, to bring forward a policy to which they are now already committed—entry into the exchange rate mechanism. That will provide a stable framework for monetary policies. It will also have an important impact on wage levels in this country. The experience of France is relevant here. Attaching oneself to a stable currency backed by stable money will give more confidence in the purchasing power of the pound.
If one increases confidence in the purchasing power of the pound, one is effectively discouraging trade unions from looking for highly inflationary wage settlements. That is exactly what happened in France. Between 1983 and 1986, France broke the wage-cost spiral by a clear

signal that it would maintain the purchasing power of the French franc. Such a policy would have a beneficial impact in this country. It would signal that we were prepared to follow an anti-inflationary policy over a long period, and it would therefore reinforce tight monetary targets.
To those who are worried by such matters—I know that my hon. Friend the Member for Selly Oak (Mr. Beaumont-Dark) is one—there is no doubt that we are buffeted or affected by changes in the deutschmark. Come what may, we shall be affected by the level of deutschmark exchange. As my hon. Friend the Member for Croydon, South (Sir W. Clark) said, we shall be buffeted by the changes that may result from the deutschmark union. That will affect us anyway. We shall not be worse off in the exchange rate mechanism in those circumstances, we shall be better off.
The argument about the rate at which we should enter again misses the point. The current level would be a reasonable point at which to enter, and it happens to be roughly similar to the level in 1986, which was another window of opportunity that we might have taken. We may enter at a level that results in having to intervene to keep the pound up. We should bear in mind the fact that that would involve selling foreign currency and buying sterling. That would reduce monetary supply, and would therefore be deflationary. Those are elements which, in our current circumstances, are themselves virtuous. That is an extra benefit of joining the exchange rate mechanism

Mr. Anthony Beaumont-Dark: Virtue is always terribly good for other people. If one sticks one's currency in the ERM, the EMS or whatever one wishes to call it, one is stuck with the fact that, if one has to stay within that band, the only way in which one can control the currency is by interest rates. If we had to put our interest rates up by I per cent. in staying in that awful artificial barrier, how could it help this country? If one really wants to ruin the economy, just put 1 per cent. more on the interest rates—which, I agree, might keep us within the band.

Mr. Taylor: With great respect to the learning of my hon. Friend on the subject, I disagree. There is a greater likelihood of an increase in interest rates, were we not in the exchange rate mechanism, if the German economy itself increased interest rates. There is also likely to be a mildly depressing effect on interest rates at any given level of inflation once we are in the exchange rate mechanism. Consequently, there is a virtuous benefit from being in the exchange rate mechanism at this point and, if necessary, intervening in the monetary market to keep sterling up. That is anti-inflationary.
In terms of the external aspects, the entry conditions laid down at Madrid have largely been met. The French abolished their own exchange and capital controls on 1 January, and the Italians are moving in that direction. If they follow suit, we shall find that over 80 per cent. of the gross national product of the European Community is represented by countries that do not have exchange or capital controls. That seems to meet the substantive external point.
Do we wait for inflation to go down in this country, and then consider joining, or do we use the ERM as a means of bearing down on inflation? It is clear from my remarks that I believe that we should enter at around our present level of inflation, so that we can bear down on it by using


the anti-inflationary benefits of the ERM. In any event, keeping a firm exchange rate will have to be part of the Government's strategy, as should be made clear in the Budget speech.
There are other questions to which we look forward to answers in the Budget. One is the Government's attitude to the gilt-edged market, which is very important. There is a weakness at the long end in interest rates at present, and there are some journalistic thoughts—

Mr. John Butterfill: Before my hon. Friend leaves his interesting point on the exchange rate mechanism, will he tell us why he does not feel that there is some difficulty for the United Kingdom which arises out of the very high volume of trading of sterling, which is not related to goods and services? Sterling is traded in any one week at about the level which would be our national requirement for a year. The same applies to the deutschmark. Such a bipolar system might upset the equilibrium of the ERM rather than assist us.

Mr. Taylor: My hon. Friend makes an interesting point. Clearly such a disequilibrating effect on the ERM will be part of the negotiations when we enter. As a result of the volatility of sterling, which sometimes results from wide international holdings and the trading in them, it may be necessary to enter in the transitional period at the 6 per cent. margin rather than with the smaller margin of 2·5 per cent.
As we need the objective criteria that membership of the ERM would give our anti-inflationary policy, we should leave the experts to decide what the circumstances and the range of fluctuation around the mean should be when they are taking us in. I believe that, unless we have a firm exchange rate policy and unless we are in the ERM to fulfil that policy, we shall not fully eradicate inflationary pressures in the economy with as much ease as we should like.
I was referring to the gilt-edged market. It would be interesting to hear in the Budget about the Treasury's attitude towards that market, about its policy towards funding and whether, given the continued inflationary problem and monetary laxity, it might consider issuing new stock, which would be an interesting signal to the market.
The single European market of 1992 has integrated liberal market economics into the British economy. Perhaps Opposition Members will want to call that liberal-social market economics. Deregulation has had a dramatic effect on our economy. My right hon. Friend the Member for Henley (Mr. Heseltine) went further, and said that some form of independent banking system within the European Community could have a beneficial effect and—if we take my analogy—could integrate sound monetary policy into the British economy. I should welcome further consideration of that point, as the argument has now been moved forward to discussing economic and monetary union.
The Government are on the right lines. They are bearing down on the rate of inflation, although that is difficult, as there are inflationary pressures in the economy. It will require continued pain and interest rates to stay at their present level for a considerable time. It will also

require a tight fiscal and monetary policy. However, all those measures would be healthily reinforced by entry into the exchange rate mechanism.
Once the economy has been put right and is beginning to grow in a non-inflationary manner, we can continue to do those things that the Government have already done in some degree of magnitude, such as investing more money in training, in education and in the transport infrastructure. Those supply side measures are welcome, but they are not the sole answer, and it is no good the Labour party pretending that they are. They are a long-term solution to a much more general British problem.
The problem is to beat out the inflationary tendency. That requires courageous government, difficult decisions and even risking short-term electoral unpopularity—but, my goodness, it is the only way that a proper Government can behave, especially a Conservative Government.

Mr. Geoffrey Robinson: The hon. Member for Esher (Mr. Taylor) referred to previous mace debating competitions in The Observer. I am sure that he will not mind my saying that, on today's performance, he would not have been in the running for any prizes.
One of the major propositions made by the Secretary of State related to inward and outward investment. All hon. Members welcome inward investment. Those who have directly benefited from it in their constituencies and know the technology that can come with it appreciate that it would be foolish to resent or resist it. The Secretary of State saw fit to refer to a recent article by Victor Keegan in The Guardian. He said that he approved of it, which would make for a pretty unholy alliance by ordinary standards. However, like all alliances it had the one hallmark of expediency—it left out the crucial differences.
What the right hon. Gentleman did not remember was that—I have not had occasion to consult that article since he spoke, but I am sure that my memory is good enough—Mr. Keegan finished his article with some severe warnings. He said that it was excellent to have high levels of inward investment as it could bring certain skills, knowledge, experience and employment to the country. However, when that investment is on stream and the dividends start to flow back in five to 10 years' time, where can we look for the indigenous investment to provide two crucial things—the flow across exchanges of the exports that are produced in this country and move abroad, and the employment that can, and still does, come from a heavy sustained investment in the manufacturing sector?
Victor Keegan said that we should welcome inward investment, but we should not regard it as a substitute for the indigenous investment—it is not intended to be that—on which the British economy will depend in the long term. I have heard much about the long-term policies that have been put forward, but which are being disregarded by the Government.

Mr. Allen: The flows of capital that return in dividends and profits could be beneficial to this country were they matched by the flows of profit that return to external competitors. The problem is that profits returning to the United Kingdom are not invested in the indigenous domestic manufacturing base—as they are in Japan, as part of a long-term planning process—but go into the


hot-money circle and even into short-term current accounts with banks, where they attract a higher rate of interest than if they were invested in domestic industry.

Mr. Robinson: My hon. Friend makes two good points, especially on outward investment. Indeed, he has precisely anticipated my next point. Just as inward investment has its rightful role within the economy and within British industry—although it is not a substitute for indigenous investment—so we welcome outward investment if it is a logical extension of any successful economy's problems of saturation of certain markets or where the distribution network is inadequate and investment must be made in distribution in those markets or, indeed, for whatever reason, in local manufacture.
The countries that are now most heavily investing abroad are those that have had the heaviest sustained indigenous investment and have the biggest current surpluses from manufacturing. Germany and Japan now have to invest heavily in Britain and other markets because they can no longer successfully invest and, nationally, no longer need to invest in their domestic market.

Mr. Butterfill: Is the hon. Gentleman aware that Britain is second only to Japan in external investments? His points about Japan and Germany are irrelevant. He is contradicting himself when he says that outward investment is essentially undesirable because we should have indigenous investment and that inward investment is also undesirable. Surely that is a contradiction. The hon. Gentleman cannot have it both ways.

Mr. Robinson: I am sorry that I gave way. Either the hon. Gentleman was not listening or he is incapable of understanding. If he was not listening he has in some way excused himself, and if he is incapable of understanding there is no point in repeating what I said.
My second point—again, touched on by the Secretary of State—is the trade balance. Not so many years ago, the previous Chancellor of the Exchequer referred to our balance of trade in manufactures as the acid test for the successful performance of the British economy. The Government now have to find refuge in all types of new economic jargon and reasoning to suggest that that trade balance is no longer of any particular significance.
I still believe in a world where the conflicts between nations of two generations ago were fought out by military means. The war in internationally traded capital goods and consumer goods is now as fierce and intense as anything we have ever witnessed. It is still about the same things—economic predominance, national sovereignty, power and influence in the world. Now, thank God, the balance has changed from the military sphere to that of internationally traded goods and services. Now, goods predominate in that international trade war. We must state with the starkest clarity that in that war the United Kingdom is losing year after year.
In the dreadful balance of payments figures announced last year, which sent tremors through the financial markets of the world, one major industry—the motor industry—carries a principal part of the blame. The balance of trade deficit was in excess of £5 billion and the motor industry made up 25 per cent. of our total deficit.
When we consider the shenanigans—I find it difficult to find another word for it—surrounding the Rover sale to British Aerospace, which Opposition Members want to be cleared up once and for all, we must say loudly and clearly

to British Aerospace that once that matter is settled it has a major responsibility for the successful development and expansion of the Rover company. It is our last semi-volume manufacturer. British Aerospace must invest in it with a commitment that goes beyond the property deals and the balance sheet strengthening of which it made great play in internal memoranda. It must realise that it has acquired a major national asset on very favourable terms from the Government and that it has a direct, heavy and continuing responsibility for it.

Mr. Beaumont-Dark: I recognise the part that the hon. Gentleman played in Jaguar's early career, but does he riot agree that some hon. Members, regrettably in his party as well, have tried to make political capital out of the agreement that was reached between Rover and British Aerospace? Bearing in mind the fact that British Aerospace has committed £1·3 billion to the future of Rover, and bearing in mind his pre-eminent part in Jaguar, will he stop some of his colleagues trying for political purposes to ruin the Rover company, on which so many jobs depend in the area in which he and I live, work and prosper politically?

Mr. Robinson: I will respond to the intervention in the same spirit in which it was made. Of course, there was an all-party inquiry into Rover. It was not a party political matter in itself, but in all parts of the House there are some hon. Members who are always intent on making political capital out of anything. I say to the hon. Gentleman, as openly as he spoke to me, that if I thought for a moment that my appeal to such hon. Members on this side of the House would be fruitful, I would make it. But I think that it would be as unprofitable and ineffective as any appeal made by the hon. Gentleman to his side.
I turn to the future of the Department of Trade and Industry. There are in the Department at least two Ministers who would much prefer to be somewhere else.

The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. John Redwood): indicated dissent.

Mr. Robinson: If the hat fits, wear it. I see the Under-Secretary of State shaking his head vigorously. I assure him that I was not even remotely thinking of him. In his junior position he does not yet register in my thoughts. I am thinking of the senior Ministers in the Department of Trade and Industry. There have been so many Secretaries of State in that once distinguished and still most important office that it seems to be regarded merely as a shunting station between Departments within the Government.
I think that it was the predecessor of the present incumbent but about six, now in another place, who went to the Cabinet, and said, "I have a paper from my Department which recommends that we should back a major national industry and that we should put up the money for this industry. We have to do it because jobs and exports are at stake. Here it is, Prime Minister. I do not agree with it. I want nothing to do with it. I cannot back it." However, the sensible members in the Cabinet went ahead and voted it through.
The same attitude is adopted by the present Secretary of State, who makes it clear that he has no interest in the Department. He does not want to conduct the Department or serve in it. What he would most like to do, as so


cunningly and cleverly pointed out by my hon. Friend the Member for Dunfermline, East (Mr. Brown), is close the Department.
Wit is not the order of the day in the debate. Conservative Members who have complained are devoid of it themselves. I ask the Secretary of State to address himself seriously to the problem. He has no mandate to close the Department or to run down major sections within it. In product-based sections there are many loyal, capable civil servants who have spent their industrial and often their whole official careers building up knowledge and experience of particular industries. We will not accept that the Secretary of State has the right to make proposals that would involve major restructuring of that Department.
I worked in the Industrial Reorganisation Corporation which was abruptly closed after the 1970 election, without consultation and without forethought for the good that it might bring to the nation. It was easy to close it, yet within three or four years, the then Prime Minister, the right hon. Member for Old Bexley and Sidcup (Mr. Heath), announced publicly that that had been a major mistake. Of course, that in itself is the strongest possible encouragement that we can give the present Secretary of State, although I hope that he will not take it as such.
I hope the Secretary of State will realise that he is in charge of a major Department of State and that nothing could be worse for the national attitude to manufacturing than for us to show insouciance and neglect for manufacturing industry. We should not denigrate the Department or take away its remaining powers. Nothing could give a worse impression of how manufacturing stands in national priorities than for the Secretary of State to do that. It would no longer be a case of the benign neglect which we have seen so far; it would be tantamount to a malign disregard for manufacturing.
No Government have yet managed to put right what is fundamentally wrong with British industry. Again I speak mainly of manufacturing industry. Certainly the Government, much to their discredit, have not attempted to solve the problem. As a nation, in our cultural institutions, in our institutions of higher education and in secondary schools, we have an in-built set of cultural values which places manufacturing far behind other things with which it should rank equal. If we are to make it clear to youngsters that we believe that manufacturing has importance, that we wish to encourage the teaching of science and engineering, and that we wish to encourage the promotion of graduates and ensure that they are regarded with esteem and respect, that must start with the Government. The lead must be given by the Department responsible for the industries whose standing we wish to restore.
The Government have not had a popular theme during the 10-plus years that they have been in office. Disparaging remarks have been made by another former incumbent of the office of Secretary of State. He could think of no better future for British workers than maintaining and servicing Japanese robots. That was his concept of British technology. A previous Chancellor said that he could see no difference between a job in manufacturing and a job in

a service industry, and that in future all increases in employment would come from low-tech industries and not from high-tech manufacturing.
That attitude has permeated the Government and reinforced our major difficulty as a nation in coming to terms with the strong international competition in world markets. At last—after 10 years—the Government seem to have caught on. We have had one speech in those 10 years that sought to redress the balance. It was made recently by the Leader of the House and deputy Prime Minister. I agree with every word he said. He said that we have to place manufacturing much higher on our national scale of priorities. He said that manufacturing was the
indispensable dynamo of a successful modern society
and concluded:
Innovate, invest, internationalise.
That was exactly the policy proposed by my hon. Friend the Member for Dunfermline, East. We have to invest more in research and development, in products and in manufacturing. Certainly we have to internationalise, but we can do it only on the basis of major investment in training.
Nothing could be more pathetic than this criticism from Conservative Members "But all those are long-term policies. You will not get any return on your investment in training, in manufacturing plant and equipment, or in research and development." That is what we heard in a remarkably passionate speech by the right hon. Member for Henley (Mr. Heseltine). That was the passion which swept the right hon. Gentleman out of the Cabinet, and I expect that it is on the back of that passion that he sees himself being swept back into the Cabinet, in due course, in a different capacity. He put his argument as if it were some condemnation, some valid criticism of the Opposition's policies. Of course it is not; it is the single best endorsement of those policies with which he agreed. If only the Government had embarked on those policies 10 years ago, when they came to office, or even five years ago, when they should have had time to see the error of their ways, we should not now face the absolute collapse of all their policies.
But 10 years is long enough. There is no point in the Government's harking back. With a trade deficit of £20 billion, with inflation pushing 9 per cent., and with interest rates pushing 16 per cent., we are confronted with a bankrupt policy, a disbanded Department and miserably uninterested Ministers. The solution to all those problems is replacement of those Ministers and those policies, and I think that the by-election in Mid-Staffordshire will take us one step further in that direction.

Mr. Quentin Davies: I ought to start, as I have done previously when speaking on economic themes, by declaring an interest in certain aspects of financial services and financial communications through my connections with Morgan Grenfell and with Dewe Rogerson. I need hardly say that neither the views nor, so far as I am consciously aware, the interests of those companies or, indeed, of their clients have had direct influence on the views that I shall be formulating this afternoon.
I too greatly enjoyed the speech of the hon. Member for Dunfermline, East (Mr. Brown). It was extremely amusing. The hon. Member has already earned quite a number of accolades as a joker in this House this


afternoon, and I should like to add a bouquet of my own. However, I thought that, in other respects, his speech was particularly disappointing. I did not betray any hint that the hon. Member had the remotest idea how to address the three issues that are highlighted in his own motion—interest rates, the balance of payments and inflation.
It really will not do to claim that interest rates are too high, that the balance of payments current account deficit is too high, and that inflation is too high. The hon. Gentleman will not find in this country, or indeed anywhere in the world, a single reputable economist—and this goes for those retained by the Labour party—who will not tell him that a reduction in interest rates tends to increase a current account deficit and to increase inflation.
In other words, the hon. Gentleman may attempt to reduce the first of his variables, or the second and third, but not all three at the same time. I hope that, before he comes back to this Chamber to lecture us on economic policy, the hon. Gentleman will at least work out in his own mind in which direction he is going.
The other disappointing aspect of the hon. Gentleman's speech, which, not surprisingly, has been remarked on already, was the extraordinary vacuity of his proposals for the future.

Mr. Steve Norris: What proposals?

Mr. Davies: I will come to them. So far as I understood them, they seemed to boil down to the view that the country's economic problems could be solved by a quite fatuous mixture of increased Government subsidies to the regions and elsewhere in this country; and, abroad, by reliance on the eastern European market.
On the question of the east European market, I can tell the hon. Gentleman that, if he were ever to become marketing director of a company, his first responsibility would be to decide whether the people to whom he intended to offer his products were in a position to pay for them. If not, he would be squandering his company's resources, and no doubt sacrificing good markets elsewhere.
The purchasing power of a country is a very simple function indeed. It is a function of two variables—the ability of that country to sell abroad, and its ability to borrow abroad. On both those fronts, the countries of eastern Europe are in an exceedingly weak position. If ever the hon. Gentleman were to become marketing director of a public company, its shareholders would all very rapidly be selling its shares short.
I fear that, if there were the slightest danger of the hon. Gentleman's ever becoming a Minister responsible for trade in this country, the international foreign exchange markets and the international equity and other capital markets would very rapidly be selling short any claims on this country.

Mr. Graham Allen: What does the hon. Gentleman think the markets are doing now? What have they been doing for the last three days? What has the pound been doing for the last three days?

Mr. Davies: I am very glad that the hon. Gentlemen has noticed that. Over the past few days, the markets have begun to take account of the possibility that the Opposition will win the next election, and the combined

aggregate intelligence of all the international markets is that that would be an unqualified economic disaster for this country.
The performance of the hon. Member for Dunfermline, East was not only disappointing, but deplorable. It was deplorable that a Front Bencher, addressing the House in front of our rather obtrusive new members, the television cameras, should, on such an important issue, deliver a speech so unrigorous in its analysis and so thoroughly devoid of any considered or concrete proposals for the future. When the hon. Gentleman, towards the end of his speech, referred to failures and bankruptcies, I could not help feeling that there is one bankruptcy in this country that is very much overdue the hon. Member ought himself to be filing a petition in intellectual bankruptcy.
I want to move now from the hon. Gentleman and his colleagues to the real world.

Mr. Graham: Is the hon. Gentleman aware that, since 1988–89, the number of bankruptcies in Scotland has risen by 61·5 per cent? Bankruptcy means not just the loss of money but the loss of jobs. Would the hon. Gentleman like to say something about that?

Mr. Davies: It would be helpful if the hon. Member were to grasp the fact that the important index is the net creation of new enterprises. Over the last few years, that net creation has been increasing at an unprecedented rate. I hope that the hon. Gentleman does not find this argument too difficult to follow. Obviously, if there is an absolute increase in the number of enterprises, there will inevitably be an increase in the number of bankruptcies. It is the net position that counts, and it is the net position that is positive.
Two problems face us at present. First, it is clear—in hindsight at least—that in 1988 the economy was suffering from some overheating: let hon. Members call that a problem of success if they will. It could be argued in retrospect that some monetary tightening could have taken place earlier than it did, but that certainly could not be argued by the Labour party, which has consistently opposed all increases in interest rates. Secondly, the past year has seen a worldwide increase in inflation and interest rates. Even countries such as the Federal Republic of Germany, Switzerland and Japan, which believed that they had solved the inflation problem definitively, now find that it has returned.
Throughout economic history, it has always been a disaster for a particular agent or country to attempt to buck a general trend. I do not know whether the hon. Member for Dunfermline, East has heard of trade cycles, or whether he believes in them; he may imagine that they are a myth of bourgeois economics that could easily be wished away if only a Labour Government came to power. I can tell him, however, that any attempt to ignore business or trade cycles is fraught with horrific consequences, and that the effect of such action will be felt most painfully precisely on the current account deficit and inflation rate indices that Opposition Members claim lie so close to their hearts.
Given those two factors, a narrow margin of manoeuvre was available to the Government. But within that narrow margin, my right hon. Friend the Chancellor has made a very significant decision since his appointment last autumn: I am surprised that its import has been lost on Opposition Members. That decision was riot to


continue to increase interest rates in sterling to meet any threat to the sterling parity on the foreign exchanges, but to allow a measure of devaluation within what remained, overall, a tight fiscal and monetary policy.
Why was that decision so significant? It meant that the reduction in the growth of demand would be felt in a differentiated fashion by different sectors of the economy. The purely domestic sectors, such as retail, house building and associated goods and services would feel the effect to the full—as they have done, and are doing—while the internationally traded sectors would find that, although their domestic markets were growing less fast, there was some compensation: in many cases, over-compensation. They had gained the ability to increase their domestic market share and their market share abroad, and to enjoy higher sterling values for the remittance of their overseas profits. A range of businesses, including not only the ICIs and the GECs—I hasten to add that I have no interest to declare in either—but also a whole range of businesses have been able to benefit from my right hon. Friend's decision. Their prospects—and therefore the momentum of investment in important sectors of the economy—can and will be maintained as a result.
Why do I express surprise that the significance of my right hon. Friend's decision has not been recognised by Opposition Members? I have two reasons. First and foremost, it benefited manufacturing—together with a few high-tech services including some aspects of engineering, financial and computer services, but largely at the expense of the service sector. Since I have been in the House, I have had to listen to literally hours of what I now suspect to have been empty rhetoric from Opposition Members about manufacturing. My second reason is the direct impact of my right hon. Friend's decision on the current account deficit: the combination of tight fiscal and monetary conditions and a devaluation of the currency is a classic formula for reducing a current account deficit or increasing a current account surplus.

Mr. Austin Mitchell: If the strategy was to let the pound come down through benign neglect, why has the CBI not expressed its usual gibbering gratitude? What is the effect of high interest rates on industry, and why are our interest rates more or less double everyone else's?

Mr. Davies: As the hon. Gentleman will appreciate, I do not speak for the CBI, but I understand that it does appreciate the benefits conferred on large sectors of industry, including manufacturing industry. Let me ask again for a modicum of rigour in our discussion of interest rates. We should be focusing not on nominal but on real interest rates—and our real interest rates are comparable with those in the United States, the Federal Republic of Germany and elsewhere.
What, then, should the Government do? First, they should persevere with their present policies; secondly, fiscal rather than monetary policy should, where possible, take the strain. I hope that my right hon. Friend the Chancellor will go not for a neutral but for a tough Budget—a Budget that reduces demand by a palpable amount. To the extent that he does so, it will be possible to resist interest rate increases, or to allow the rates to decline further and faster for any given set of inflationary and other economic outcomes.
Thirdly—I think that the House is in general agreement on this—we need to invest more in education and training in both public and private sectors, and also in the British infrastructure. I have nothing to add to the eloquent speeches to that effect that we have heard today. I also thoroughly endorse what has been said about the importance of the single market, which will provide one of the best prospects for non-inflationary growth in the 1990s and beyond—not merely because of the one-off benefits of longer production runs, economies of scale and the reduction of some transactional costs associated with trade, which were calculated in the Cecchini report, but also because of the dynamic effects and particularly the impetus to entrepreneurship and innovation that invariably follow from an intensification of competition, such as we will face in the single market. Therefore, greatly endorse the points made on that score.
I should like to add a fourth point of my own. The Government should give—I hope that they are already giving or that they will give—some consideration to how the British savings ratio, the proportion of household income that is saved, can be increased over time. Over many years and generations, it has been clear that, at any turn in the trade cycle, the British savings ratio is lower than that of our major competitors. In terms of the current account and inflation, that constitutes a lower ceiling or a higher constraint on the levels of investment and growth that we can sustain.
I suspect that any secular change in the British savings ratio can be engineered or modulated only by fiscal means. Of course, many cultural and institutional factors underlie any given savings ratio. I will not burden the House with my own views about how that may be achieved, but this issue needs to be addressed sooner rather than later. Therefore, I hope that my right hon. Friend the Member for Huntingdon (Mr. Major) will have something specific to say on that subject when he delivers his Budget in a few days.

Mr. Graham Allen: This has been a series of scintillating speeches, in which some of the contributions of Back Benchers have excelled those of the Front-Bench spokesmen on both sides, barring that of my hon. Friend the Member for Dunfermline, East (Mr. Brown). The Secretary of State for the still-existing Department of Trade and Industry managed to come up with the most appalling speech that I have heard in my brief time in the House. It was totally devoid of content, and lacking in humour, commitment and delivery. It was the speech of a man who is on his way out—of a shadow of a man in an invisible Department who is gradually disappearing in his own rhetoric. Much has been said about The Observer mace competition. Hon. Members of all parties had ideas about what could be done with the mace when they heard the Secretary of State's speech. Although the Department is not yet closed, the Secretary of State could certainly have hung the "out to lunch" sign round his neck on the basis of today's performance.
As my hon. Friend the Member for Great Grimsby (Mr. Mitchell) pointed out, it is interesting that the right hon. Gentleman's speech lacked any real political or economic content. There was not a single word about monetarism from either the right hon. Gentleman or any of his hon. Friends. The days of philosophical dogma that


so laced the Secretary of State's speeches in his previous incarnations no longer seem to be with us. The right hon. Gentleman seems devoid of even the sparse intellectual covering of his earlier years.
The right hon. Member for Henley (Mr. Heseltine) then spoke. He has two sorts of speech, depending on the leadership position. His first sort of speech is made by the rebel, with his mane flowing, who puts forward what he alleges are alternatives to his Government's policies. But no more of that now. When the Government have a 15 or 16 per cent. deficit in the opinion polls and rising, the right hon. Gentleman can see the main chance. This afternoon we heard an attempt to ingratiate himself with a number of his Back-Bench colleagues. That was unfortunate, because sometimes the right hon. Gentleman has something to say——

Mr. Butterfill: On a point of order, Mr. Deputy Speaker. We have been regaled by the speeches of many hon. Members today, but when are we going to hear the speech of the hon. Member for Nottingham, North (Mr. Allen)? All he is doing is commenting on other people's speeches.

Mr. Allen: I shall not do the hon. Gentleman the courtesy of discussing his remarks, but I should like to make one or two comments about what the alternative Prime Minister, the right hon. Member for Henley, said. It seemed to be a sort of confession. When he was Secretary of State for the Environment, the right hon. Gentleman was one of the main proponents of intervention, enterprise zones and development corporations. He was involved with the famous Toxteth programme in Liverpool and the garden festival. But all that was put aside today when he tried to align himself with a slightly broader church in his party, so that by the time of the next leadership election the rich man's Sir Anthony Meyer hopes to have positioned himself slightly nearer the centre of his party than he is now.
The right hon. Gentleman had an interesting concept about the Bank of England, picking up the idea of the former Chancellor of the Exchequer, the cry Blaby, not too long ago. The right hon. Gentleman referred to the possibility of a central bank for the United Kingdom. However, there is a problem with that concept because a central bank is designed to ensure that a cohort—a board of directors for European banks—can decide the direction of monetary and fiscal policy, but on a non-elected basis.
The right hon. Gentleman found it difficult to sell that concept to his Back-Bench colleagues. He tried to do so in an ingenious way by linking it to the concept of national sovereignty, suggesting that a divorced non-political bank would enhance the sovereignty of this country. Unfortunately, we all know too well that when the Deutsche Bank changes its interest rates, it is literally a matter of minutes if not seconds before our Chancellor of the Exchequer follows——

Mr. Quentin Davies: So that the House may follow the hon. Gentleman's argument, did he mean the Deutsche Bank or the Bundesbank?

Mr. Allen: It was a mistake to give way to the hon. Gentleman. He has already had his 20 minutes or longer, even to the extent of irritating the hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark).
The Government's amendment to our motion shows their constant theme of the alleged success of their policies. The policies and successes that are outlined in that amendment include:
the highest rate of economic growth … the largest increase in manufacturing productivity … and record levels of industrial output".
That is fine. I am pleased that those things have been placed on our agenda. The only problem is that the base on which those figures are calculated has been fiddled to an extent that would do credit to the former Secretary of State for Employment, also the former Secretary of State for Social Services, the right hon. Member for Sutton Coldfield (Sir N. Fowler). I repeat that they are fiddled figures on a fiddled base. Any consideration of the full extent of what has happened during the Tory locust years—the ten and a half wasted years—reveals that in the first two years, under the Chancellorship of the present Lord President of the Council and Leader of the House of Commons, almost one quarter of this country's manufacturing base was eradicated.
Perhaps I can help Conservative Members by explaining that in words that they may understand. It is rather like a cricket team trying to improve its batting averages by taking out the scores of all its bowlers. Of course, that is not so. It is sleight of hand. In calculating the base over the past four or five years, the Government have come up with statistics which are more beneficial and flattering than is really the case.
One of the Secretary of State's most interesting remarks this afternoon was:
The deficit … is not a sign of industrial weakness.
As an economic indicator, what is a deficit if not a sign of either industrial weakness or strength? It simply means that our manufacturing base is no longer strong enough to ensure that we export as much as we import. We live or die by our ability to export manufactures. Those are the sentiments, if not the words——

Mr. Irvine Patnick: Of the CBI.

Mr. Allen: The hon. Gentleman has anticipated me correctly. I am sure that the CBI will not mind if I quote it:
To help close the overall deficit gap, an increasing proportion of United Kingdom production, especially manufacturing production, will need to be devoted to exports or to import substitution … to pay for goods, (especially consumer goods) we cannot supply, the UK must trade manufactures (nearly 60 per cent. of all UK trade)".

Mr. Keith Mans: How does the hon. Gentleman explain the Japanese trade deficit throughout the 1950s?

Mr. Allen: My hon. Friend the Member for Coventry, North-West (Mr. Robinson) referred to that. Japan is benefiting from domestic investment in that period. It built up a strong domestic base so that it could operate both import and export strategies. That is why Japan is now in a position where it can invest in this country and repatriate dividends and capital to the benefit of its indigenous industry. I thank the hon. Gentleman for helping me to make that point.
In the amendment, the Government also refer to a fall in unemployment. Once again, congratulations to the Government on obtaining that fall in unemployment. But from what base? When will unemployment be reduced to the level that pertained when they came into office? When they came into office they had the tremendous benefits of


North sea oil, which was coming on stream, and the credit boom which they unleashed in the latter part of their 10 years in office. Many of the jobs which they boast that they have created are part-time and cannot replace the sort of jobs taken out of the economy during the previous few years.
The amendment also refers to bearing down on inflation.

The Minister for Industry (Mr. Douglas Hogg): Before the hon. Gentleman moves on from the fall in unemployment, he might care to tell the House that in his constituency during the past 12 months, unemployment has fallen by 17·2 per cent. Why did he not tell us about that?

Mr. Allen: I am pleased that the Minister draws attention to the efforts of Labour-controlled Nottingham city council and Nottinghamshire county council. Their economic development committees have put some effort into mitigating the worst effects of the Government's policies. It has been one of their main objectives. They have been successful and I am proud of them. I know that the people of Nottingham are proud of them, too. They just wish that they had a little more help from the Government and their economic policies.
Admittedly, the Government have not had much chance to bear down on inflation as they have been in power for only ten and a half years. The time has come for the judge and jury of the Government's economic policies—Mr. Nigel Lawson's words, not mine—to return the verdict and deliver the sentence. The former Home Office Minister, the hon. Member for Grantham (Mr. Hogg), may hear me speak in support of a sentence of capital punishment on the Government in respect of inflation. They have been unable to contain inflation, and the electorate will pass that sentence at the next election.
Given all the advantages that the Government have had over the past 10 years, their record is disastrous. It would be disastrous in other times, let alone times when billions upon billions of pounds have been available to the public sector to reinvest. What happened to that money? The Government have paid it back in early repayments of debt. It has been used in the City for further speculation and circulation in the international money markets. The money has been completely wasted by the Government. We have the cheek to pretend to offer financial advice to eastern Europe, under the misnomer of the know-how fund. How we have the nerve to tell those countries how to run a free economy, I do not know.
How does the stuff that the Government have produced affect individuals and real people? One of the main ways is through the interest rate, not merely because every percentage point that goes on the interest rate hits small and large employers alike and makes their lives difficult. More directly it hits individuals who are trying their best to buy their homes.
The Chancellor of the Exchequer gave me a helpful parliamentary answer today. I asked him to list the average mortgage in each region and then to list the increase per week in the payments made by people trying to buy their homes. In the east midlands, the average mortgage is £34,700. The increase per week from June 1988 to today in my constituency and in the east midlands

is £24·59 per week. That applies also to the constituency of the Minister, although he does not appear to be interested in it. There has been a 76 per cent. increase in interest repayments by business. Business is now borrowing.
In the past when business was borrowing it was good news. It borrowed to finance investment. Now it is engaging in what is called distress borrowing to meet repayments on previous loans. Businesses are in serious trouble unless they can get their hands on the money to repay loans. Those are the effects of high interest rates on business and on us.
We often hear the Chancellor of the Exchequer and his minions talk about financing the deficit. It is clear that we are financing the deficit. Every home owner, small business man and large company is funding the deficit. It is not a negative or neutral term; it means that we are paying through the nose because of the Government's economic failure, despite the best efforts of individuals to keep the economy, their business or livelihood alive and to keep a roof over their heads.
It appears that some people are doing well—[Interruption.]

Mr. Deputy Speaker (Mr. Harold Walker): Order. When the hon. Gentleman is addressing the House, it is discourteous for a meeting to be held simultaneously.

Mr. Allen: I understand the need to caucus in the Conservative party. Things are very bad indeed. Conservative Members may be discussing a potential leadership candidate, whether it is the right hon. Member for Mole Valley (Mr. Baker), who has just come into the Chamber—perhaps he has just returned from paying his high poll tax—or the right hon. Member for Henley, whom we heard make a leadership bid earlier tonight. There are several other runners, but you should be tolerant, Mr. Deputy Speaker, of the difficulties of the Conservative party.
Now that I have the full attention of the House, I inform hon. Gentlemen that I was discussing the large banks. Lloyds, Barclays and the Midland bank do not seem to be doing too badly. In the recent past those banks have lent money all round the world to every tinpot dictator who wanted the latest tank and the biggest bang possible in his area. They have gone into debt to no great benefit of the people in those countries, and defaulted on their loans. Now all those banks are queueing up to say that they have bad debts and that they want "provision" against those debts. Again, that is a high-falutin' technical term which means that they want a handout. It means that they want us, the taxpayers, to put money in their kitty because they have been unable to lend properly.
There should be "provision" for people in Nottingham who, every week, as the Chancellor of the Exchequer told me, pay another £24 on their mortgage. As my hon. Friend the Member for Renfrew, West and Inverclyde (Mr. Graham) said when he gave Scottish examples, there should be provision for small business people who are being bankrupted by the thousand. There should also be provision for large companies, which are the backbone of the national economy.
These things will come about only with a change of policy. Most of us know that the Chancellor of the Exchequer and some of his team are trying to drag the Government towards the middle ground. They are trying to make them become more neo-Keynesian before the next


general election. I wish them well, because I would not want them to fail on that basis. Their success means too much for our people, the Health Service, education and other services. However, as they creep in that direction they will he drawn back to the true faith by the Ayatollah in No. 10.
That means that the only way in which we shall make significant changes in economic policy in this country and ensure that economic policy is conducted for, and on behalf of, the people, is to throw the Conservative Government out of office. We must elect a Government committed to investment, research and development, training, education and rebuilding the economy in alliance with the CBI, trade unions and all the other interest groups. In that way we shall ensure that our country has a future, not just a miserable past 10 years.

Mr. Anthony Beaumont-Dark: I do not wish to make a long speech. No Back Bencher should need to speak for more than 10 minutes because if one cannot say what one wishes in that time, it is likely that it will not be worth hearing. Therefore those who follow me can get ready to speak.
As was said in "A Tale of Two Cities", we face the best of times and the worst of times. We face a most interesting period in this country. In the past few years we have been brought up with two great economies of the world standing astride us like colossi, Germany and Japan. Those times are changing, as times do.
Japan has gone on and on because it was lucky enough to lose the second world war and be able to rebuild the country and economy based on the self-sacrifice of its people. In addition, the Japanese looked years ahead, as we in this country must do. Their investment is not, like ours, thought of in terms of six to 12 months being a long time. They look five to 10 years ahead. This country must face up to that in due course. However, there is no doubt that things are changing for the Japanese. Their interest rate structure is changing.
When the Select Committee on the Treasury and Civil Service was in Japan about 12 months ago, Japanese companies could raise money at 1·75 per cent. Now they have to raise money at about 5 or 6 per cent., and the way things are going, the interest rate will go even higher.
West Germany has stood astride Europe for almost 20 years and now it wants to build a greater Germany because it wants to make the German yolk one yolk again. I am not making a political point, but an economic point. Now that the wall is coming down, West Germany has a social budget of $5,000 million this year. People are pouring over its borders at 2,000 a week because the social payments in West Germany are six times those in East Germany.
That means that the deutschmark, which had a good and solid as gold basis, is now becoming a bit more drosslike, as are the currencies of many European countries, including our own. West Germany's interest rate structure is also changing. Therefore, the western world, which really means America, Japan and Germany, is changing around us. The problems that we face are profound and based not just on the British Government's policy, but on the fact that circumstances are changing, and are likely to change in an inflationary way.
Japanese interest rates have changed by more than 2 percentage points in the last 12 months—from 3 to 5·5 5 per

cent.—which means more than it does in this country. In Germany, because of the mad, headlong rush to another and greater Germany, interest rates are also changing. Our interest rates start off from a much higher base arid we must be willing to stand firm. In the next few months, Germany and Japan may put up interest rates by at least 1 percentage point. That may be difficult for them, but I believe that another 1 or 2 percentage points on the interest rates in this country could be catastrophic for industries and home owners.
We should be willing to let the pound take some of the strain. As Rab Butler said, before many people here were alive—unfortunately, I was, because it was about 30 years ago—we must export or die. If we are unable to export, we will die. When we think of the tens of billions of pounds that we have had to spare in this country, we must be willing to say that we must build things better. Although some Opposition Members may not agree, one problem that we face in this country is that some people have taken advantage of the more enlightened policy on competition and success being allowed to succeed.
It is difficult to accept it when, as in the past 12 months, senior management give themselves a 28 per cent. rise and tell others that a 7 per cent. rise will ruin the very industries that they serve. If sacrifices have to be made in order for us to kill inflation, they should be made not just by those at the bottom, but by those who lead. It is obscene when those in industry give themselves 28 per cent. rises and then say to those to whom they say they cannot afford to give a 7 per cent. rise, that this country is going to rack and ruin.
I have a similar message for the unions. It may be a good idea to talk about a 37-hour week. There is nothing wrong with that as long as that 37-hour week is genuinely productive. However, if we give ourselves a 37-hour week, without the productivity to go with it, all we do is put up manufacturing costs by 20 per cent. This country cannot stand that.
Therefore, regardless of whether we have a Labour or Conservative Government, we are at a genuine threshold. In Japan and Germany things are on the change. We do not want to be the nut in the cracker.
Top managers should resist giving themselves rises of 28 per cent. and workers on the shop floor should recognise that we must export or die. We must produce or die. We must make sure that the prices that the Government can influence, whether they be rail, water, electricity or gas prices, are influenced in the right way. It is no good people putting up rail fares by 20 per cent. one year and 15 per cent. the next, saying that they are doing their bit to make the railways competitive.
It is no good telling people that it is all right if electricity or gas prices rise by the rate of inflation plus x per cent. It is sheer humbug and nonsense to talk about the rate of inflation plus a percentage, because that affects everybody. A 5 per cent. increase in gas charges means one thing to me, but it means something quite different to someone on a low income. A 2 per cent. increase in rail fares may be an irritation to me, but it is a catastrophe to people on lower incomes. Percentages are like bikinis: what they show is super, but what they conceal is vital. People tend to forget that it is nonsense to complain to a millionaire about a 1 per cent. increase when to someone on social security it is a disaster.
If we face the uncertain and dangerous future together, we can do something, but if we think only in terms of mean, vile party advantage, the future that we face, whoever wins, is grim indeed.

Mr. Thomas Graham: I am exceptionally disappointed tonight to see that no members of the Scottish National party have seen fit to come to the Chamber to listen to the debate. The motion says:
this House condemns the Government's economic failure which has brought the highest interest rates, the worst trade deficit and the highest inflation of the United Kingdom's major competitors; is concerned at the rising number of business bankruptcies and redundancies and at the investment cutbacks in the run-up to 1992; deplores the further reductions in support for regional investment, research and development, and export help; and calls for an investment budget for industry and training.
I am sure that all hon. Members will agree that that is particularly relevant to the people of Scotland, so I must draw attention to the fact that the seats usually occupied by Members of the Scottish National party are vacant and bare.

Mr. Allen: My hon. Friend has been here throughout the debate and he will know that no member of the Scottish National party has been present today. Not one has contributed or even shown his face in the Chamber. I have no idea whether their constituents are aware of that.

Mr. Graham: I am most grateful to my hon. Friend.
I am delighted that a statement has been made today about Scotland's lowland airports. I, with my hon. Friend the Member for Paisley, North (Mr. Adams), represent Glasgow airport. I am delighted that the decision has now been made, so that we can get on with the business of ensuring that Glasgow has one of the finest airports in the world. We in that area suffer from a high level of unemployment, inflicted by the Government, and the Government should at least attempt to restore some of the jobs that have been lost since 1979.
Therefore, I welcome the ending of the uncertainty, and I hope that the Government will put in the necessary infrastructure so that Renfrew district council can continue to improve the area. I hope that we shall be given the finance that is necessary to ensure that the developments meet the needs of the local community.
Environmental considerations are high on the Government's agenda, and they have said that they will take into account the pollution that many people in the shadow of the flight paths over Renfrewshire, Glasgow and Bearsden are worried about. That may not be such good news for the folk in Prestwick, but I understand that the people of Ayrshire have been given an assurance that the Government will do their best to ensure that there will be no job losses or redundancies and that they will work to ensure that Prestwick remains open. I hope that I shall not see Prestwick closed in a couple of years' time. I hope that the Minister takes on board and ensures that Renfrew district has the necessary finance to regenerate the local economy. That also applies to Strathclyde regional council. I am delighted that something has happened.
But who are the Government kidding when they say that everything in Britain is rosy and wonderful? We have

a massive trade deficit of £20 billion, yet the Secretary of State shrugs it off, saying that we are doing fine. The Prime Minister is as happy as Larry because she has only the poll tax to worry about. It would be laughable were it not for the millions who are unemployed.
Tonight we have heard about some of the lucky people who have jobs, but in my constituency highly skilled and highly trained individuals in many disciplines such as engineering and teaching cannot find a job. Nor can they afford bikes. Some of those who have got on their bikes and come down here are languishing homeless on the streets of London. They cannot afford housing, so they cannot get a job. Many of them have skills, but they have listened too much to the rubbish that the Government are putting out. I wish that the man who had coined the phrase "on your bike" was here tonight, because I have a bike for him and I will make sure he rides it all the way to France and perhaps even further.
I remember not long ago discussing the Scottish economy, when a Minister used the wonderful phrase "the engine of free enterprise". I am sure that all my hon. Friends remember that phrase. Conservative Members must have worked hard to find that one. Listen to this account of the engine of free enterprise. The Rover deal cost Britain millions. Then there was the sale of the royal ordnance factories, one of which is in my constituency. That was one of the biggest robberies since Sir Francis Drake was a privateer sailing about the main. The Sundance Kid could learn a lesson from Conservative Members.
We have seen the privatisation of water and British Telecom. That is the engine of free enterprise—give everything that belongs to the people of Britain to the Government's friends for free. But the next Labour Government—and there will be one—will make sure that their pockets are empty. The Government have another think coming. I can assure them that the people of Britain will have had enough of their policies. I request not to see an engine of free enterprise.
At one time Scotland was known as the workhouse of the world. The shipyards in the Clyde employed 50,000 men and women. The noise heard was the beating of steel and of men working. They came home at night to their families with wages so that their kids could go to school with decency.
Working men and women want the right to earn a wage. They do not want this claptrap about low pay and part-time jobs. They want full-time employment and they want money which gives them dignity and allows them to live properly. They want the right to be able to pay their mortgages. They do not want massive interest charges which throw them into mortgage misery.
Has the Minister ever suffered mortgage misery? Does he know what it is like not to be able to pay his rent on time? Has he ever received a letter through the door telling him that the rent is behind? Has the Minister ever had a letter from the electricity board telling him to pay the electricity bill in two or three days or the supply will be turned off? People do not have sufficient money because they are in low-paid or part-time employment, or because of the miserable pittance of a benefit that the Minister was so proud to boast about tonight when I asked him a question. He said that the unemployed are lucky to get benefit.
By God, what a sick answer to people who wish that they had a Government committed to employment, to


decent benefits and to a decent standard of living, so that children can be educated. People want to tell their children that, after their education is finished, they can walk with their heads held high into meaningful employment. They want to educate their kids so that they can have a position in society and can live a full life and die in comfort.
From the cradle to the grave, Governments have a responsibility, but this Government seem to duck all their responsibilities and the Minister's statement tonight—"They arc lucky to be unemployed and getting benefit"—makes me sick.
My constituency is relatively affluent. There is one area where very wealthy people live and there are other areas where poor people live, but although they are poor in material things, they are strong in spirit. They have not died in their thousands. When jobs are advertised, they run in their hundreds, and they queue up for them. Therefore, the Minister should not think that the thousands of unemployed people in my constituency want to be unemployed, because they do not. They desperately want and need jobs, and they will queue up for them in the stinking, bucketing rain that we get in Scotland. They will stand in the miserably cold weather for hours on end waiting for a job. The Government have given them miserable stinking benefits and have even cut benefits.
As British people, we are demanding—I say "we" because I hope that I am one of them—a new economic agenda. We need a new social agenda and a new international agenda for our country. In the 1990s, Britain needs a Government who will get the nation back on the right track. and the Opposition offer that.
The Scottish Development Agency has an important part to play in Scotland in assessing and regenerating our communities. I understand that the Government wish to sell off the Hillington estate—a great big privatisation of the sort that the Government love so much—but if they sell that estate, I hope that the money is given back to the community. I have no objection to the scheme, because it is in Renfrew district, but I hope that the money gained will be used to get the thousands of unemployed people back to work.
I also have no objection to the Inverclyde enterprise zone, which is so beloved of the Government and of the Minister. That is in my constituency, and I wish that the Government would put in the infrastructure that is so badly needed. Whether they like it or not, that means cash—hard money—to help in that.
I shall not labour the point too long, but I have heard tonight how wonderful things are supposed to be in the economy. I shall read a summary of the most recent Fraser of Allander economic commentary which was published in December. It gave a general summary of the economic state of Scotland and two central points are made in it. First, although Scotland's economic performance has been improving——

Mr. Roger King: Exactly.

Mr. Graham: The hon. Gentleman can intervene if he wants.
First, although Scotland's economic performance has been improving, there are widespread fears of a recession in the business world. Secondly, the Government's policy of high interest rates is having a particularly harsh effect on Scotland, given that we have a high proportion of industries susceptible to fluctuations in interest rates.

Scotland is more heavily dependent than the United Kingdom on the production of investment goods, and on construction, which makes investment of great significance. Expensive borrowing therefore causes severe problems.
The commentary refers to other studies carried out by—wait for it—the Scottish chambers of commerce business survey and the CBI in Scotland. The commentary said that the latest chambers of commerce survey
shows … virtually every different sector showing a marked degree of pessimism about immediate economic prospects … A balance of -35 per cent. on business confidence is the lowest ever recorded by the SCCBS, far lower even than that recorded in 1986 in the aftermath of the collapse in the price of oil and the recession which resulted in Scotland".
The pessimism expressed in the survey is the worst since the surveys began in 1984 and is in line with the CBI's survey, in which manufacturing optimism was said to be at its lowest level for seven years.
I have already told the House tonight that Strathclyde regional council, which covers half of Scotland, has lost more than half its manufacturing jobs—166,000 losses. What an incredible and appalling record. How can we ever hope to improve export potential if we have such a prodigious loss of people and skills, and people languishing unemployed and on the dole? It is an indictment of any society.
When does the Minister intend to visit with me the unemployed production workers in my constituency, who are now living on unemployment benefit—which he tells them they are lucky to be receiving? When will he tell them that they can get back to work and produce for the good of this country? When will he tell their children that he will provide meaningful education—not Mickey Mouse employment training projects, but apprenticeships, university places and college places—to give them the opportunity to compete in the 1990s and not to drive them back to Victorian conditions?
The Minister has a responsibility to stop kidding people and to stop pulling the wool over their eyes. The Government should resign and let us get on with the business. Let us have a general election and I am sure that the people of Scotland and England will throw the Government on the scrap heap. That is the way to get folk back to work, to get trade and industry back to work and to get the deficit down. Let us say halloo and hurrah and get rid of this Government.

Mr. Kenneth Hind: To follow the thought that the hon. Member for Renfrew, West and Inverclyde (Mr. Graham) has just expressed, the debate is not about unemployment. It is significant that in 1990 the Opposition have not tabled a motion on unemployment in the United Kingdom. The simple reason is this Government's major success in reducing unemployment. I represent West Lancashire and a town that is one of the Government's major success stories. Unemployment in my constituency has fallen by about 3,500 during the past two and a half years. There has been a massive influx cif new companies and new investment. Skelmersdale was regarded as a black spot in the north of England, but its prosperity is growing. New houses, offices, shops and factories are being built and the town is facing the future with confidence.
The work force is prepared to be flexible. It is not dominated by old-style trade unionism. Most of the


factories in Skelmersdale are no longer dominated by the trade unions, and the workers have been prepared to accept new and flexible working conditions. They are happy with them and they are well looked after by employers who care about them. We have been able to attract large amounts of overseas investment, particularly from Japan and the middle east.
This debate focuses attention on the balance of payments, interest rates and inflation. Labour Members understand about taxing people and spending money. Their sympathies lie with those in the community who earn low wages. They do not understand that wealth creation leads to the provision of the welfare services that make life in our community worth living and improve the lot of the less privileged.
The Government have had to take difficult decisions which have not been shirked. Inflation is a major problem. It was endemic during the 1960s, 1970s and 1980s. Whenever prosperity increases and the standard of living improves, as it did during the late 1980s, we suck in huge quantities of imports. We have to slow down an overheated economy and introduce anti-inflationary policies.
Interest rates have to be the major weapon against inflation. It is unfortunate that the Government have had to choose such a weapon, but it is the only major weapon that will lead to significant changes. We do not like having to increase interest rates. It makes us unpopular, and it leads to additional mortgage interest repayments. But the Government had to take that difficult decision to improve the standard of living and deal with the major economic problem—inflation.

Mr. Peter Thurnham: My hon. Friend referred to the better prospects for people in his constituency. Does he agree that they reflect the great advantages that the north in general is experiencing? The Building Employers Confederation has recently published a bulletin headed "North South Divide Reversed." It points out that member firms of the south are expecting a fall in output but that in the north and in Scotland they expect either a stable or an expanding work load. The Manchester chamber of commerce and industry carried out a survey in the north-west which illustrated the increasing confidence and the competitive advantages of the north-west. The Bolton chamber of commerce carried out a survey headed "Firms on the up and up." It points out that the economic fortunes of Bolton firms have taken a welcome turn for the better. Does that not paint a much better and brighter picture than that painted by the hon. Member for Renfrew, West and Inverclyde (Mr. Graham)?

Mr. Hind: I endorse what my hon. Friend says. I am delighted that prospects are improving in Bolton. It is a symbol of the general improvement in the north-west of England.
People have to realise that inflationary pressures result from their spending—not only from their home expenditure but from every other kind. That applies particularly to local government. Local councils do not accept that their expenditure has an impact on the

economy of the country as a whole and that their overspending must be made good either by the taxpayer or the ratepayer, which in turn has inflationary consequences.
The major problem is our balance of trade. The fact that we suck in large quantities of imports is inflationary. However, we need to expand the size of the British manufacturing base, so we need those imports. During the early 1980s, the economy began to respond in many ways, but we did not succeed in expanding our manufacturing base.
Investment is at record levels. Exports are increasing and moving towards closing the balance of trade gap. We must give as much help as we can to manufacturing industry. I hope that Treasury Ministers will consider changes to the tax system to provide tax allowances for manufacturing equipment. Corporation tax relief will not lead to tax allowances being given where they are most needed. It will not lead to the greatest good for our economy. It might lead to increased dividends and salaries for directors, but help should be directed where it is most needed.
We must continue to attract inward investment. There is an organisation in the north-west called Inward. It does a sterling job round the world in attracting new industry to this country. The results in my constituency are typical of the work that it has done. It has attracted companies from Japan and elsewhere in the far east, from the Lebanon and from the United States. I am glad that my right hon. Friend the Secretary of State for Trade and Industry is in the Chamber. When he is examining the budgets of organisations that attract inward investment, I hope that he will remember that that organisation in the north-west merits a high budget, that it is doing sterling work and that it will produce good rewards.
As for import substitution, cars represent a large slice of the balance of payments problem. I cannot underestimate the importance of attracting to this country the Nissans, the Toyotas and the Mitsubishis that will build cars using British components and British workers and that will attract money into the British economy at the same time replacing cars that are now imported from Japan. Import substitution will help us a great deal and narrow the trade imbalance. I welcome such initiatives.
When my right hon. Friend next meets the French Trade Minister, I hope that he will bear in mind her speech yesterday, as reported in the press, in which she suggested that Japanese car firms based in Britain will face difficulties over importing into the Community—that spurious reasons will be found to prevent Japanese firms based in Britain from exporting to the Community. I hope that that will be fought tooth and nail and that we will ensure that the French are not allowed to impede us in this way. Perhaps the good lady could look at the 70 Japanese-French firms that are based there. What is sauce for the goose should be sauce for the gander, and their exports to the United Kingdom and the rest of the Community should be treated in exactly the same way. These are important factors.
I hope that my right hon. Friend will also consider the imbalance in trade with Japan. Japan's is still a very closed economy and that country is potentially one of the best markets in the world for British goods. That is not only my view; it is shared by the Americans. Last week, President Bush made it very clear in his summit conference with the Japanese Prime Minister in California that there has to be some movement on the part of the Japanese. We have


made a great deal of headway into that market, but the questions of seats on the Japanese stock exchange, changes in the pricing of whisky imported into Japan, and so on, leave us with a very big trade imbalance on which to work. The Japanese must realise that, when we have free trade throughout the world that underpins the whole of the EC and the world economy, they have to play the game and join in. They cannot close their market, one of the most important in the world, to manufactured goods from Britain and other European countries.
Labour Members have tabled this motion. They can raise taxation; their party is known as the party of high taxation, so they know how to do that. They can spend money, because we hear over and over again in this Chamber promises to spend money raised from the taxpayer. But they are incapable of creating wealth. They proved that they were great borrowers during their last period in office when they had to call in the International Monetary Fund. We have avoided that.
We see different answers to the problems that Labour Members have mentioned in this debate and we do not see increased Government subsidies to the regions as the only way of reorganising the economy. Nor do we see handing over the administration of the economy to civil servants, people with no experience of running industry or commerce—people who are essentially administrators and who do not have a great deal to do with the profit motive—as the way to establish British prosperity in the future. On "The World at One" a few months ago, the Leader of the Opposition when he was asked what answer he had to the problems of inflation said that he did not know. That probably typifies Opposition policy when it comes to getting to grips with our present difficulties.
Finally, I want to refer to the Opposition's position on community charge, which in many respects typifies their lack of understanding of basic financing. In the county of Lancashire this year the Labour-controlled county council have increased their spending—this is before the community charge comes in—by 17·5 per cent. I have recently addressed meetings in various parts of the county in which I have asked any member of the audience who has had a wage increase of 17·5 per cent. this year to stand up. In the seven meetings at which I have spoken in the past fortnight nobody has stood up.
Yet those same people are being asked to find extra money to pay the increased levies that the councils are making by raising their spending. Those people are living in circumstances in which inflation is just below 8 per cent. and they are getting wage or salary increases at or about that level. The councils say to the public that they must raise the money, but their understanding of sensible planning and running any kind of organisation is lacking.
The community charge is very much under attack but the problem will not be solved by taking away education from local authorities. That is because, taking the rate support grant and the uniform business rate, in most cases the sums just about add up to the cost of education. Nor will the answer be found by throwing more money at the problem, because that money would be taken from the taxpayer and the burden of inflation would be increased. Furthermore, it would undermine the confidence that world markets and bankers must have in our ability to manage our economy properly. It would be sending out the wrong messages to the world.
One of the major principles of the community charge must be accountability. By sticking to our principles on

this matter and saying that local government must manage its finances properly, we are making councils accountable to the electorate. Eventually, they too will realise that if inflation is at 7·5 per cent., they cannot increase expenditure by 17·5 per cent., or 25 per cent. and expect the economy and local government to run properly. That is the message that we must get over.
We have problems in the economy but, as in 1985–86, this Government can handle them. The Government got over the problems of the decline in the value of the pound and in the price of oil. If we are positive in our thinking, advance our attack on the balance of payments arid inflation, and maintain downward pressure on inflation. I am sure that we shall succeed. The Opposition may laugh today but in two years' time when we get to elections they will sing an entirely different tune.

Several Hon. Members: rose——

Mr. Deputy Speaker: Order. I can see three hon. Members seeking to catch my eye. I understand that the first Front-Bench spokesman will seek to wind up at about ten minutes past 9, so the arithmetic is fairly obvious—35 minutes divided by three.

Mrs. Alice Mahon: I can take a hint as well as the next person, Mr. Deputy Speaker.
I have sat here through most of the debate and all we have heard from the Government is excuses in one form or another. They have talked about the pain that will be borne during the next year or so because of the position into which they have got us because, early in the 1980s, they quite deliberately abandoned manufacturing. Because of the disastrous policies that they pursued then with regard to manufacturing, Britain is in danger of being very seriously undermined. I know what they did to manufacturing, because I come from a manufacturing town. In the north, we lost about 30 per cent. of our manufacturing jobs, or over 1 million jobs.
The Government were warned by members of the other place. In 1984, the Lords produced a very good report on overseas trade, because they were concerned about the trade gap and what was happening. They made a number of recommendations, one of which was about interest rates. It seems to me a tragedy that the Government ignored that recommendation and continue to do so. That recommendation was clear:
Cheaper money would lead to more investment by small and medium sized enterprises. The Government should have more regard to the needs of industry as a borrower when they take a view on interest rates".
Quite clearly, the Government totally ignored that excellent advice.
Those of us who have constituencies in which there is still a high percentage of people employed in manufacturing—in my constituency, 45 per cent. of workers are still employed in manufacturing—are deeply concerned about this Government's single policy of using interest rates to control inflation.
We have heard excuses about the trade deficit not mattering and the current interest rates, which are the highest in Europe, having little effect. A written answer in Hansard on 21 June 1989 suggested that each increase of one percentage point on base rate will cost industrial companies around £0·4 billion in a full year. That is a very serious burden for industry.
I see examples of that almost daily in my constituency because of the Government's policy of high interest rates. The employers in my constituency recognise just how damaging it has been to them and they are quite open about it. In the past two months my constituency has lost more than 400 jobs in manufacturing, 150 of them at Dorlux—which I mentioned in an application under Standing Order No. 20 a couple of weeks ago. The employer blamed high interest rates. Sixty jobs went at Crowthers, a subsidiary of Coloroll, a company which is going through some difficulties. On 23 January 1990, an article in the Financial Times blamed "casualties caused by the collapse of the British housing market" for job losses at Coloroll. Even Conservative Members would not deny that the housing market is in serious difficulties caused largely by the high interest rates and the fact that people can no longer afford to buy.
Recently 20 jobs were lost at John Frederick, which makes UPVC windows and 30 at a local textile firm and 150 at Fredenburg, another firm in the Calder valley.

Mr. Douglas Hogg: Will the hon. Lady give way?

Mrs. Mahon: I shall not give way, as there is not sufficient time. The Minister will have plenty of time to reply to the debate. I tried to intervene five or six times in the Secretary of State's speech, but he refused to give way, and he had plenty of time.
Just this morning I heard that Pland Hygena, a small engineering firm, has announced another 50 redundancies. The employer blamed high interest rates.
David Marshall, the managing director of a well-known firm in Halifax recently said:
high interest rates will affect sales of building materials over the next 12 months".
and his firm recently made a number of redundancies. Another employer from a well-known textile firm in Halifax also said that the firm had planned to expand its factory because it had quite good order books, but because of the high cost of money it could not borrow so the expansion would not go ahead.
Several of my hon. Friends have mentioned that the CBI has criticised the Government's lack of an economic policy. The January 1990 quarterly industrial trends survey published by the CBI stated:
Business confidence has declined further, on balance, for the fifth consecutive survey.
That does not make good reading. It continued:
Respondents indicated that they were less optimistic than four months ago".
Despite the Minister's huffing and puffing, his friends have deserted him rather quickly. I would argue that all the people I have quoted would normally support a Conservative Government.
The textile industry, which is a constituency interest, has really gone through the mill. Textile companies have really had a shakeout, but they fought hard and did everything the Government asked them to do. They re-equipped and slimmed down their work force almost to non-existence. Conservative Members cannot say that the textile industry has a militant work force that asks for too much, as some of the pay rates are scandalous.
The textile industry is on the verge of another recession. What help does it get from the Government? In a recent debate on the IMF and the Silberston report, the

Under-Secretary of State for Corporate Affairs, who is a well known free marketeer, told us that he did not think that such a protectionist measure was any good for jobs. Professor Silberston warned that 33,000 jobs could go and Peter Booth, the national secretary of the textile trade group of the Transport and General Workers Union reckoned that the figure could be nearer 100,000. If that happens, the textile industry will be wiped out in my constituency and probably in West Yorkshire. Job losses on that scale would have a devastating effect on the lives and livelihoods of my constituents.
When the right hon. Member for Henley (Mr. Heseltine) was making his leadership bid speech, he hinted that wage costs were partly to blame for current economic difficulties. I have just received a report from the West Yorkshire low pay unit. I recognise that we are the low pay capital of the north, but some of the figures are pretty appalling. One in eight women working full time earn less than £100 per week and nearly one third of women working full time in West Yorkshire earn less than £120 a week. One in six men earn less than £150 a week, and if overtime is excluded, the figure becomes one in four. If one compares those figures with the national average male wage of £269 a week, one gets some idea of the low pay problem in West Yorkshire. Three thousand men and women in my constituency earn less than £100 a week.
I recognise that time is running out, so I shall conclude my speech. Reference has been made to training, and the right hon. Member for Henley blamed everything on the Labour Government. That is disgraceful, after 11 years of missed opportunities. The Government have given us nothing but YTS, CP and now ET schemes. I met a group of people on such a scheme. They came to my surgery the other morning and said it was a disgrace. They likened it to a displaced persons' camp. Nobody knew what they were doing. They told one man to sit in front of a computer and asked another man who had been in engineering all his life whether he would like to learn double entry bookkeeping, and then nobody came near him for a week.
To return to the trade deficit and the future of manufacturing, in 1980 our trade with Europe in manufacturing was roughly in balance. Today, the deficit is about££14 billion. That is an appalling failure by any yardstick.
The Government have failed us, and after the disgraceful speech by the Secretary of State today, it appears that they will continue to fail us. The House of Lords recognised the Government's failure. It said that a "sense of national purpose" was required and then made some international comparisons. The Government would sell the royal palaces if they could. The report said that we should create
Links between different groups in society".
We have had 10 years of union-bashing and deregulation. The report said that "the long term view" was essential. That is anathema to the Government. It referred to education and training, which the Government have downgraded. It stressed that the Government should have an industrial policy, but we have heard the Secretary of State say that that is not on the agenda, as he believes in deregulation and no planning whatsoever. It talked about barriers to trade and quotas being necessary in some cases, but the other week we heard the multi-fibre arrangement might go.
If we compare what the Lords thought we should have with what we have heard in today's debate, we have no reason for optimism about the balance of trade deficit. All Opposition Members agree that it will get considerably worse before it gets better, because the Government are not for changing.

Mr. Roger King: Apart from a short meal break, I have sat listening to the debate for four and three quarter hours. I have been surprised that, on a day when Her Majesty's Opposition initiated the debate, we have not had a contribution from a Labour Member defining Labour policy on trade, industry, the balance of payments or any other problem facing the economy. We have had nothing but criticism of the Government.
We do not know how a future Labour Government would address the challenges that face the nation. In the coming 10 years or more, we shall take steps to ensure that we continue to sustain economic growth. That process will continue so long as the Government do not lose their nerve and so long as they retain their present stringent economic policies.
We got a glimpse of what might be perceived as Opposition policy from the hon. Member for Warrington, North (Mr. Hoyle), who referred to what I thought was a national plan mark 2. No doubt, should Labour become the Government, we would have something of that sort, which would be more bureaucracy as an excuse for doing nothing.
The solution proposed by the hon. Member for Renfrew, West and Inverclyde (Mr. Graham) was to put our problems on to a European agenda. He seemed to suggest that, if that did not solve them, we should make them the subject of a world agenda. I admire his optimism and desire for a world solution to our problems, but I doubt whether that will turn out to be official Labour party policy.
The hon. Member for Dunfermline, East (Mr. Brown) also failed to provide a semblance of Labour party policy. As he is the official Opposition spokesman, one would have thought that he would adduce the sort of policies that Labour would present should they become the Government. Instead, we got from him what might be described as negative policy.
Hon. Members will recall that I intervened in his speech to ask about Labour's attitude towards an important aspect of investment, that of road building. I assure the House, as a Birmingham Member, that, if we do not have a good roads system with access to the ports and other areas of manufacturing, we will die. Roads are our arteries, and we must have them. We have no desire to cover the entire countryside with six-lane motorways, but we must have a basic road infrastructure.
To their credit, the Government have embarked on a rolling programme of road building and improvement, covering 10 years and costing £12 billion. Although that is a lot of money, we must not forget that, during those 10 years, road users will contribute about £200 billion into the coffers of the Exchequer. So although in percentage terms it is a small sum, it is welcome and essential.
The official policy of the Opposition seems to be that we should do away with such a roads programme. Indeed, a commitment to that effect appears in the columns of

Hansard. I shall make sure that all the west midlands hears about that because, as I say, without a decent roads system we will wither and die. May we be told clearly whether it really is Labour policy not to have a programme of road building and expansion? If so, Labour will be condemned at the ballot box as luddite in its approach to the challenges facing the nation. The CBI has said that, without adequate roads, it cannot guarantee that British industry can deliver the goods.
Despite our problems, our economy is moving forward. We are getting investment from all over the world. Over 100 overseas manufacturing and service companies have established in the Birmingham region. The West Midlands development agency has played a major part in bringing investment to my constituency. A German seat manufacturing company has announced its intention to establish in my area, and I feel certain that, before long, we shall have a French manufacturer of car components, followed by Italian and Japanese firms. We are becoming a multinational area for the car component industry.

Mr. Allen: rose——

Mr. King: I hope that the hon. Gentleman will forgive me for not giving way. Time is short, and others wish to take part in the debate.
The car industry in Britain is in the process of dynamic rebirth. Hon. Members who had the good fortune to visit the Rover works in my constituency at Longbridge saw a business that has been totally transformed as a result of £400 million of investment. We have in that plant state-of-the-art development and production with, especially important, state-of-the-art management-union relations. It is the first car company—the first manufacturing firm—in Britain to edge towards seven-day manufacturing around the clock. There is a temptation for the unions to accept a 37-hour week, and I hope that, when negotiations have been completed, we shall have round-the-clock working at Longbridge, because plant that remains idle for any part of the day in this cost-conscious age is not serving the nation.
I am happy to say that, as a reult of the investment in our motor industry, not only is there a six-month waiting list for some models of the new Rover 200 being built at Longbridge, but there is a 12-month waiting list for the new Land Rover Discovery being built in Solihull.
Perhaps the British disease reveals itself in that direction. Perhaps we under-estimate our ability so much that we finish up with enormously long waiting lists, and that attracts foreign competition. I hope, that as a result of new working methods, those waiting lists will be reduced and that the Rover 200 and the Land Rover Discovery will be produced in ever greater numbers and exported to all parts of the world, so earning vital income for this country.
I endorse what some hon. Members have said about Japanese car companies establishing in this country. That is happening partly because we have had an open economy. We have allowed our competitors to establish their distribution systems here. I accept that, in the short term, that may have undermined our indigenous manufacturing, but because of that open policy—not just in cars but in videos, televisions and many electronic and consumer goods—overseas manufacturers have been encouraged here. Once they have built up their bedrock of demand in Britain, they have moved their manufacturing


capability here. We have provided ourselves with a Japanese manufacturing platform from which we can export goods into the European Community.
I endorse the remarks of my hon. Friend the Member for Lancashire, West (Mr. Hind), who pointed out the problems that we are experiencing with the European Community, and principally with the French, who are claiming that the Japanese quota for cars sold in Europe must include not only those that come from Japan as built-up cars, but Japanese cars made at so-called transplant factories, in the United Kingdom. I reject that concept and feel sure that the Minister will bang the table in France and at the European Commission to make sure that a British-built car, whether it bears a Ford or a Nissan label, is regarded as a British car, rather than as a substitute for something else. I think I see the Minister for Industry nodding an assent. I take it that he is completely behind me in that matter.
Our main hope for the future—I trust that the hope will be realised—is that Britain's car industry can grow to perhaps 2 million-plus units a year by the end of this decade. That would dramatically improve our economic trading balance with the rest of the world.
Hon. Members in all parts of the House have said that as a country we do not invest enough in innovation. The Japanese invest by erecting a huge glass tower over their scientists and engineers, who try to reproduce ideas originating in the West. Sometimes they have their own ideas, but while they are also innovating, they certainly go about perfecting known engineering standards.
We do things differently. Most of our design initiatives seem to be achieved on a serviette in steak bars and round the pub. The Mini was designed in that way, as many other products have been. It is a natural way of doing things in this country, which is different from that followed elsewhere. One cannot compare one nation's ability with another's in engineering expertise, design and development. We are especially inventive, but we have let ourselves down in translating those inventions into goods that will sell.
I am reminded of the old Ferguson formula four-wheel drive car, which was designed in the 1950s. It used a four-wheel drive system which was basic, simple and effective, yet largely ignored by United Kingdom manufacturers. I have seen only one production car using it on sale—the Jensen FF, made in West Bromwich in the west midlands. Yet that same system has now been adopted by many companies in Japan and elsewhere as the formula for four-wheel drive. We could have completely dominated that market, but for a variety of reasons, including being too early on the scene, we were unable to take up the initiative—with the exception of the immortal Land Rover, which continues to sell and is in good demand.
Over the past 10 years, we have achieved a great deal in completely reforming our training systems. We must now go further because of the demand for higher skills. I am convinced that the Government's initiative in developing training and enterprise councils throughout the country will play a major and significant role in providing the training and skills that we desperately need for tomorrow. The challenges are great, but the country is set fair.

Mr. Austin Mitchell: I shall not attempt to follow the hon. Member for Birmingham, Northfield (Mr. King), because he read his Central Office brief on economics for fourth-formers very eloquently. I ask him only why, if the Government have been so successful with the motor car industry, the deficit of trade in motor cars and components has increased so steadily under this Government. Why are we in that situation if the industry has been so successful?
The hon. Gentleman has illustrated the usual rule of Governments in a mess: when in doubt, attack the other side. He did that vigorously. This Government are now up a well-known creek with their economic policy. We might say that they are up an excretory creek without a paddle. They have got themselves into a mess from which there is no escape on current policies. The balance of payments gap cannot be closed unless British industry expands and invests, but it cannot do that with interest rates at a crippling level. The balance of payments gap cannot be closed unless the pound sterling comes down, but it will not, because interest rates are deliberately being kept high to maintain the value of the pound. They are being used as a deliberate prop for sterling. We are paying foreigners high interest rates to bring junk money to this country to close a gap in trade that we cannot close with what we produce in this country and what we sell from it.
Interest rates have become this Government's Zimmer frame, as they are all that are keeping the Government standing. The Government have no alternative. In saying that they will depend so heavily on interest rates, they are saying that they will make imports cheap by keeping the pound high and so take jobs away from this country. They will inflict pain on every house owner with a mortgage and they will try to bring down the price of houses and assets through the squeeze. They will try to squeeze demand, which will produce bankruptcies—and not only in retailing. Sock Shop is only the beginning. A series of other bankruptcies will follow, which will then knock on to the manufacturing sector. Coloroll is only the beginning there. The knock-on effect will be cataclysmic.
We are in for a miserable, bitter 12 months of economic wind-down. The Prime Minister will have a better year than Mrs. Ceausescu, but only just. It will be a pretty miserable year for all of us with the deflation that we are now entering, which will be reinforced by the coming Budget.
The Government's calculations are almost certainly cynical. They want to get the problems over in a year of misery, and then to start to relax the policy next year and to look forward to an election, probably in 1992. We are in for the longest 28 months in British history, as the Government hang on, squeeze the economy and then begin to relax as the election approaches. That is the cynical aspect. The reality is rather different.
The crisis and the figures obscure a fundamental change in our economy. We are seeing a national tragedy unfold which has been obscured by the Government's electoral gamble. We are seeing the strange death of industrial Britain. We are seeing the shrinking of our industrial base on which jobs, economic growth, our ability to pay and our way in the world all depend. It is now at a level where it is unable to do the jobs on which our economy traditionally depended.
We have not felt all the consequences so far. The oil has helped to keep us going, but we shall feel the consequences in the 1990s. The industrial base is now less than one quarter of our economy and it has lost a huge share of its home market. The home market share of British industry has come down from 83 per cent. in 1970 to 64 per cent. in 1989, which is a bigger increase and a bigger share of imports than in any comparable economy in the advanced industrial world. The base of British industry was its home base.
The share of our exports in world manufactured trade has shrunk under this Government. British industry cannot satisfy demand, yet we cannot sustain demand unless we can pay for it with what we produce. We cannot just consume and not produce. We must shift resources back to manufacturing, return to jobs in manufacturing, and rebuild the manufacturing base of the British economy. Nothing else will do the job. Services are parasitic. We cannot be hairdressers to the world or turn London into a more expensive version of Bangkok, policed by Lord Rees-Mogg, to provide that type of service to the world. Financial services will not do it, as our share of world financial services is declining as fast as our share of manufacturing trade and invisible trade will go into deficit as the profits from Japanese investment in this country return to Japan. That was the emphasis of Mr. Keegan's article in The Guardian, which has been quoted so often.
There is no alternative except to rebuild industry. We are in an industrial war and it is a war we are losing. We are losing to competitors who are better invested and better trained and who have some idea of co-operation between the state and industry, unlike the policy of the Department of Trade and Industry, which is as hands-off as a Saudi kleptomaniac. The dearest wish of the Minister is to get out of the business altogether. We wish him joy on his personal getting out, but not on withdrawing the Department with him.
We need to rebuild industry, and to do that we must do many things. We must improve the human capital in industry—the skills and the training. We must also expand back into the markets that we have lost, both at home and overseas, and repair the sustaining networks of suppliers and of research and development—those things from which all new development comes. That needs several things.
First, it needs a competitive exchange rate. There can be no transfer or shift back of resources into manufacturing—without which we have no future and upon which everything depends—unless the exchange rate is competitive enough to finance that shift back through market forces. Yet the pound is up in real terms since 1976, when we promised the International Monetary Fund to maintain the competitive position of British manufacturers. The pound is up 36 per cent. in real terms since then. We cannot retrieve the markets we have lost, the jobs that we have exported to the Common Market—about 1·5 million of them—and the trade we have lost unless we return to the competitive position that we were in then. There is no alternative—that is the only way to do it. It is a necessary but not sufficient condition.
Secondly, we need cheaper money to stimulate investment. We need that to invest on the scale that we have to if this country is to fight back. We need long-term thinking, not the short-term horizons that the City, with its obsession with balance sheets and takeovers, forces on

British industry. Japanese industry thinks long-term. It invests to obtain a market share, it builds up through the difficulties, it obtains a network of suppliers and dealers together and then it takes over the market. We think no more than three months ahead. Everyone protects their backs because they are afraid of takeovers. Unless we think long-term we cannot get back.
We need co-operation between industry and the Government, not the hands-off approach. We are facing corporate competition between the industries and Governments of our major competitors. We must have the same co-operation. We need co-operation too to restrain the inflationary consequences of a competitive exchange rate, of economic growth, and of fighting back. We do not need a Government who heighten inflation by what they have done to electricity prices, gas prices, the introduction of the poll tax and high interest rates, and then blame the people for inflation.
What economic nonsense that is. There must be a better way of defeating inflation than putting people out of work, depressing demand and deflating the economy. I am not sure what that better way is, but there must be some co-operation that can lead us towards that better way, rather than the savage alternative that the Government are embarked on.
There is one last thing that we need and that is a Labour Government. The next 28 months will be the longest and most difficult in British history before the people can speak and tell this Government to get out because they have failed. At the end of the 28 months we shall have a Labour Government who will work for jobs, for industry and for growth, and will co-operate with the people and not discipline them by deflation and the cruel punishment of high interest rates. We need a Government who will seize the '90s to replace this Government who have wasted the '80s.

Mr. Doug Henderson: Whatever else the House believes, everyone will accept that we have had a vigorous debate. I hope that that endorses the Opposition's choice of the important subjects for debate.
We have heard some telling speeches. My right hon. Friend the Member for Swansea, West (Mr. Williams) talked of the importance of the manufacturing sector. M y hon. Friend the Member for Warrington, North (Mr. Hoyle) said that time was running out for that sector. M y hon. Friend the Member for Coventry, North-West (Mr. Robinson) made a plea for indigenous investment. My hon. Friend the Member for Nottingham, North (Mr. Allen) reprimanded his colleagues for being too hard on the Government in judging them on their inflation record after only 10 years in office. My hon. Friend the Member for Renfrew, West and Inverclyde (Mr. Graham) expressed his horror at the Secretary of State's remark that people were lucky to get benefit when they were out of work. My hon. Friend the Member for Halifax (Mrs. Mahon) told us of the misery caused to her constituents by the Government's policies. My hon. Friend the Member for Great Grimsby (Mr. Mitchell) highlighted the increasing number of bankruptcies because of the Government's most recent policies.
We also heard interesting speeches from Conservative Members, especially from the Birmingham area. The


House will take time to ponder why there has been an increase in such speeches. The hon. Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) referred to the contradiction of employers paying themselves wage increases of 28 per cent. and at the same time claiming that the 7 per cent. wage increases for which their workers were asking would cause great damage to the economy. I noted particularly that the hon. Member for Birmingham, Northfield (Mr. King) welcomed the work of the West Midlands industrial development agency in attracting foreign investment into the area.
As is always the case, we heard some predictable speeches—from the hon. Members for Croydon, South (Sir W. Clark), for Esher (Mr. Taylor) and for Stamford and Spalding (Mr. Davies). I felt sorry for them as they scrambled round looking for arguments to support the Government. One has to give them credit for their loyalty to lost causes.
We heard an important constituency speech from the hon. Member for Lancashire, West (Mr. Hind) who made a plea for aid from the Secretary of State for organisations in Lancashire that are seeking to attract industrial development. All credit is due to the local authorities which have supported the initiatives.
My hon. Friend the Member for Dunfermline, East (Mr. Brown) made a powerful speech. He indicted the Government's record of mismanagement, not just in 1989 and 1990 but throughout the past 10 years. He further indicted the complete lack of commitment of the Department of Trade and Industry to aiding Britain's industrial recovery.
We had a somewhat limited speech from the right hon. Member for Henley (Mr. Heseltine). As the House well knows, he has been willing to criticise in the country the Government's policy on the exchange rate mechanism and their disastrous regional policy, but unfortunately all that the House heard from him today were institutional points about more independence for the Governor of the Bank of England. But perhaps that is all we could expect from a Member who, notwithstanding his criticisms in the country of the Government, trooped through the Conservative Lobby to vote for the tax-cutting Budget in 1988 which gave rise to all the present difficulties. I believe that Conservative Members will recognise that the right hon. Gentleman's contribution was directed more at the leadership of his party than at the economic problems of the country.
The Government's problems do not stem only from recent policy decisions. The previous Chancellor of the Exchequer would not face up to the importance of the balance of payments. He said in this House:
The risk of a resurgence of inflation is the only real problem facing the British economy today, a risk far greater than any threat arising from the deficit on the current account of the balance of payments."—[Official Report, 29 November 1988; Vol. 142, c. 591.]
But then we were told that the balance of payments did matter. We were told that we should all be concerned about the deficit. Every month, as the balance of payments figures are produced, the excuses have been reeled out: they do not accurately reflect the true position in the economy. Indeed, the Prime Minister began to take notice

of the balance of payments figures in January 1988. I remind the Minister and the Secretary of State of what she said:
Last month's trade figures were a freak.
Then we were told, in a long explanatory note with last summer's figures, that the dock strike had distorted the trade figures. This month, in an even longer explanatory note, we were told of the erratic items that my hon. Friend the Member for Dunfermline, East explained to the House earlier. In relation to this month's figures, we were told about diamonds. Diamonds always were a girl's best friend, but this month they have been a very convenient friend to the Prime Minister. However, they have been no friend to the millions of women whose families have faced more mortgage misery as the markets discount the long explanatory notes from the DTI, as the markets discount the freaks, as they discount the erratics, and as markets discount the diamonds. Those markets threaten to force another hike in interest rates to combat speculation against sterling.
The Minister will know what I mean when I say that the Secretary of State does not have a reputation as the most perceptive member of the Cabinet. That was confirmed today in front of the whole House. I want to say something about the contribution of the Secretary of State. I listened very carefully to try to catch the salient points, but I was able to take only two points from the speech. The first is that, clearly, as my hon. Friend the Member for Great Grimsby pointed out, the Secretary of State was confused about the difference between capital payments and current payments in the balance of payments. Secondly—I want to give him a little credit—he was right to say that the trend matters. What he did not own up to was the trend of the past 10 years. If he were to face up to that trend, he would recognise that we have a trading problem and that his Government have turned a trade surplus of £2 billion into a deficit which, it is predicted, will be £18 billion later this year.
But I want to be fair: I want to give the Secretary of State credit where credit is due. He has acknowledged that the trade deficit is a problem. During the debate on the address in reply to the Gracious Speech, he said:
I know that the trade deficit is unacceptably high. My right hon. Friend the Chancellor has taken steps to reduce it. However, the causes of the deficit lie not in the supply side failure but in the unacceptably strong surge in consumer demand and record imports of capital equipment for industry."—[Official Report, 22 November 1989; Vol. 162, c. 121.]
Hon. Members will wonder which of the steps taken by the Chancellor the Secretary of State was referring to. Was he referring to the Chancellor's anti-inflation strategy? Did he believe that the Chancellor had endorsed the increases in electricity prices, water prices and rail fares? Did he believe that the Chancellor would be happy with the poll tax increases that have been imposed on even Conservative local authorities? Was he not alarmed by the increase in mortgage costs that the Chancellor inflicted on millions of people as he tried desperately to take steam out of an economy whose overheating had been fuelled by his predecessor in the 1988 Budget? Does not the Secretary of State accept that all those policies pushed up inflation, thus having the opposite effect to what was intended?
If the Secretary of State was somewhat ambiguous about the steps taken by his right hon. Friend, he cannot be accused of any ambiguity in regard to this second point. There is no doubt that the unacceptably strong surge in


consumer demand has caused a problem, and the country will want to ask some questions. Did not the previous Chancellor recognise that the 1988 tax handouts to the rich would cause problems? If he did not, did not the current Chancellor—who was Chief Secretary to the Treasury at the time, before going on his package holiday to the Foreign Office—recognise that a tragic spurt in the balance of payments deficit would be the inevitable result?
If neither of them understood the likely impact, why did not the then Secretary of State for the Environment—now Secretary of State for Trade and Industry—dash along Marsham street, round Parliament square and into Whitehall to warn the Treasury of their impending folly? Did he not perceive the economic damage that the 1988 Budget would cause, or was he too busy preparing the ground, drawing up proposals and probably consulting Conservative councilors—or perhaps not—about his highly successful plans for the poll tax, or his plans for water privatisation?
After his speech today, the House will probably not expect the Secretary of State to understand capital investment statistics, but I can tell him that it is not true that the importation of equipment for British industry took a significantly larger proportion of total imports. The shares in 1988 and 1989 were broadly similar to that of some 20 years ago. In 1986, the capital goods deficit was £0·8 billion out of £9·4 billion in total visible trade; by 1989, the deficit was £1·6 billion out of a total of £24·5 billion.
If capital goods were distorting the trade figures, the balance of payments would not be in its present mess. With a fall in manufacturing investment in the last quarter of 1989, January's figures would have displayed an improvement.

Mr. Ian Taylor: The hon. Gentleman has mentioned the disastrous impact of the 1988 Budget several times. In fact, through tax cuts, the budget released taxes amounting to some £4 billion, while total credit expansion in that year was £40 billion. The problem is related not to fiscal policy but to the expansion of domestic demand, and high interest rates are the only way of bearing down on that.

Mr. Henderson: The main question to which the hon. Gentleman should address himself is whether the 1988 tax cuts had a beneficial effect on the economy, or can be shown to have caused more damage subsequently. The Government should have devised a balanced Budget that took account of the needs of investment, as well as those of increased consumption.
Do the Government now recognise what the country has increasingly come to recognize—that our economy is hopelessly out of balance and that even with all the benefits of £87 billion-worth of North sea oil revenues, our manufacturing sector is weaker than at any time in our history? Do the Government recognise that manufacturing output growth in the United Kingdom came 18th out of 20 OECD countries between 1979 and 1988 and that in the past three months our manufacturing output grew by only 0·2 per cent? Do they accept that manufacturing investment was only 2·5 per cent. of GDP in 1988, which I remind the House the Government claimed was a record year, compared with 3·3 per cent. in 1978?
If the Government recognise that there is a link between those figures and the state of our manufacturing sector, do they also acknowledge that the failures of our

manufacturing sector lie at the core of our trade deficit? Writing in the Sunday Times last Sunday, David Smith described our trade performance as a "grim record", noting:
From 1979–1989, the volume of non-oil exports grew 43·9 per cent. while imports increased by 84·8 per cent.
If the Secretary of State needs further convincing, will he consider the view of the Confederation of British Industry about our supply-side failures? John Banham, the director general of the CBI, told the CBI conference last November:
We cannot expect to deal our way out of our problems Investment in all its aspects—plant, skills, innovation and the infrastructure—remains the key".
He believes that such investment is necessary to tackle not only manufacturing efficiency and competitiveness, but the cause of the inflationary pressures in the economy. I agree
Inflation is not a genie that has escaped from a bottle. Britain's inflationary gap with other countries is caused by a misguided macro-economic strategy. Today's inflation is caused by the Government's specific policy choices. They introduced the tax-cutting Budget for the rich that led to a glut of money chasing luxury imported goods. Those policy choices also rely on high interest rates and on an artificially shored-up exchange rate.
It is what economists used to call stagflation, but surely it is still stagflation. It is stagflation that will lead to cost pressures on our industrial competitiveness and have a further alarming impact on the trade deficit through its impact on export prices. That is not only my view. It was shared by David Smith in the Sunday Times last Sunday.

Mr. Nicholas Bennett: Is Labour's policy to reduce exchange rates, creating more inflation, to reduce interest rates, to increase taxes or to have import controls? What is Labour's alternative to the present policy?

Mr. Henderson: The hon. Gentleman has shown that he is even more confused than some of his hon. Friends who spoke earlier.
The House has been asking for Labour's answers, so I shall give some answers. Like any sensible Government—like sensible Governments in Europe—a Labour Government would ensure that a proper balance was achieved in the economy and that proper choices were made between investment and consumption. A Labour Government would ensure that we invested in the important things, such as education, training and research and development, which the right hon. Member for Henley identified as key points.

Mr. Hind: I am grateful to the hon. Gentleman——

Mr. Austin Mitchell: So you should be.

Mr. Hind: The hon. Member for Newcastle upon Tyne., North (Mr. Henderson) listened to my speech with care., and I apologise for missing the first part of his speech. We want to know how the Labour party would effect the policies to which he referred. It is no good talking only about trading and balances. What will a Labour Government's fiscal policy be? What will they borrow? For what rates of taxation will they aim? What will be the exchange rate? Those are the things that we need to know. How will Labour achieve their policies?

Mr. Henderson: I am surprised that the hon. Member does not believe that training is important. After hearing his views on his local industrial development agency,I


should have thought that he would believe that in his local economy training is absolutely important. He should have listened more closely to the speeches of Opposition Members, which have highlighted the important points in seeking to restore our economy.
We are now seeing the results of economic mismanagement. It is an economy in chaos and hopelessly out of balance, structurally and regionally. Together, those imbalances have caused further damage to the economy, which has meant that the Government have completely failed to tackle the long-standing problems of stop-go which has created a congested southern part of the country and areas in the north that are working far below their capacity.
It is not only a question of what the Government have failed to do. Clearly, they have failed to invest in training, education, research and development for the 1990s and in roads, railways, telecommunications and other important parts of our infrastructure. But it is also a question of what the Government have done. The Government know that they have taken £5 billion out of rate support grant to local authorities which could have been spent to regenerate our inner cities. They know that they have cut expenditure on export services. They know that they have hacked regional development aid. At a time when industry is crying out for support, they are breaking up and selling off the Department of Trade and Industry.
People are demanding a new agenda. The people of West Oxfordshire demand a new agenda and the people of Mid-Staffordshire will demand a new agenda. People want new ideas for a new decade. They demand an end to cynical consumer short-termism and an end to policies that give no thought to tomorrow. People are demanding an end to pay-offs for the rich. They want Britain to invest in its future. The British people want to be proud of British industry again. They want to be able to drive along our roads and travel on our trains without congestion. They want proper education and science for tomorrow's generation.

The Minister for Roads and Traffic (Mr Robert Atkins): And more roads.

Mr. Henderson: Yes, they want more roads, and more railways. They are looking forward to a better age. People want an end to greed, consumerism and the moral austerity that goes with looking after number one. People want the beginning of co-operation, concern and a moral commitment that goes with looking after the generation of tomorrow.

The Minister for Industry (Mr. Douglas Hogg): This has been in part an interesting debate, and also an important debate. It has been interesting because of the resolute refusal of Labour Front-Bench spokesmen, particularly the hon. Member for Dunfermline, East (Mr. Brown) to spell out the detail of Labour policy.

Ms. Hilary Armstrong: rose——

Mr. Hogg: I shall not give way for the moment.
That was especially the case when the hon. Member for Dunfermline, East was challenged by my right hon. Friend the Secretary of State. I shall identify one or two of the questions left unanswered by the hon. Gentleman.
It, has been an important debate because it has been possible to put current economic concerns into their proper perspective. The Government accept that there are at least three economic issues that are of general concern and need to be addressed: the current inflation rate, high interest rates and the adverse trade gap.
It is wholly unseemly and quite inappropriate for the Labour party to criticise the Government about the inflation rate. Of course the present rate is too high, but even at its current level, it is only about one half of the average annual increase achieved by the Labour Government between 1974 and 1979. It is 19 percentage points below the record level of 26·9 per cent. that the Labour Government achieved in August 1975. Moreover, the policies that the Labour party and its trade union friends constantly urge upon us, most notably an immediate and substantial reduction in interest rates, a craven concession to any inflationary wage demand that may be made and a heedless hike in public spending, would widen the trade gap and lead to an early return to spiralling inflation.
I accept that interest rates are uncomfortably high, in that they put pressure on disposable income. However, I also accept that inflation puts yet more pressure on people's disposable income. As my hon. Friend the Member for Lancashire, West (Mr. Hind) so correctly said, the only effective way to reduce direct inflationary pressures is to bear down on consumer demand by and through interest rates, and that we shall continue to do for as long as may be necessary.

Mr. Win Griffiths: rose——

Mr. Hogg: I shall not give way at this point.
We shall not tolerate a return to the inflationary policies of the 1970s, fuelled and presided over by the Labour party, which confiscated savings, impoverished the elderly, destroyed both public and private investment and led us in shame to the IMF.
I am astonished that the Labour party is unable to recognise, or perhaps unwilling to concede, the improvements now taking place in the balance of trade. The transformation, especially in our exports, is quite extraordinary. In the three months to January 1990, there was a fall of £1·3 billion in the visible trade deficit. I turn specifically to exports, as did my hon. Friend the Member for Croydon, South (Sir W. Clark), and here the figures are more encouraging. In the three months to January 1990—excluding erratics and oil—the volume of exports was up 4 per cent. over the previous three months, and by no less than 11 per cent. on a year previously.
The import figures also point in an encouraging direction. In the three months to January 1990, the volume of imports was 1 per cent. lower than in the previous three months and only 2 per cent. higher than in the year previously. It is worth peering more closely at those crude figures. In the last three months, exports of manufactured goods rose by 3·5 per cent. Imports of manufactured goods fell by 1 per cent. Exports of passenger motor cars rose by 11 per cent. Imports of passenger motor cars fell by 3·5 per cent. Those figures, simple and readily comprehensible as


they are, point to the underlying strength and continuing competitiveness of British industry. That is the fundamental truth which has become apparent during the debate.
During the past 10 years, Britain has seen a fundamental transformation in her absolute and relative position. The facts are striking, so I shall give them. Manufacturing output in 1989 was 5 per cent. higher than in 1988 and 23 per cent. higher than five years ago. Manufacturing investment in 1989 was 5 per cent. higher than in 1988 and 34 per cent. higher than five years ago. In 1987 and 1988, economic growth was 4 per cent. higher in each year, on top of five successive years of previous growth. Manufacturing productivity has grown 25 per cent. in the past five years.

Mr. Win Griffiths: Will the Minister give way?

Mr. Hogg: I shall give way in a minute.
Unemployment has fallen by 1·5 million in the past three and a half years. In the past 10 years, the real take-home pay of a married man on male average earnings with two children has gone up by one third.

Mr. Griffiths: rose——

Mr. Hogg: That is a transformation of a radical and rare kind.
I do not claim that the Government are entitled to exclusive credit for all that—that would not be right—but for the Labour party to disparage that record and to pretend that it is not so, or that if it is so that it is of no significance, is to commit a yet grosser failing; grosser because it shows either that they do not know the facts or that, knowing the facts, they do not care to admit them, or that they admit the facts but they do not understand them.
However one views it, Labour has been less than candid with the House and has had little or no significant material to contribute to the debate.
Now I come to the hon. Member for Dunfermline, East. He did not deserve it, but I gave him the courtesy of listening to his speech. He said that he would say something about Labour policy. He did: it took him 30 seconds in a speech that lasted 32 minutes. There was a brief reference to more training, more research and development, lower interest rates and the exchange rate mechanism. He made only broad generalisations.
I entirely agree with the criticisms by my right hon. Friend the Member for Henley (Mr. Heseltine) of the speech made by the hon. Member for Dunfermline, East. He said that lower interest rates would stimulate demand, have a disastrous effect on inflation and widen the trade gap. I also agree with my right hon. Friend when he said of the hon. Member for Dunfermline, East that the talk about training and education is hot air, because, had the Labour Government done it way back in the 1970s, we would not be in the mess that we are in now. We are doing something about that, and they did not.
There may have been no policy from the hon. Gentleman but, goodness me, there was a great deal of ignorance. For example, he complained about a shortfall in research and development. The hon. Gentleman has not been doing his homework.

Mr. Ridley: He never does.

Mr. Hogg: Had he done it, he would have found some interesting facts. Between 1983 and 1987, industry invested more than 27 per cent. in real terms in research and

development. The number of scientists and engineers employed in industrial research and development rose by 13 per cent. between 1981 and 1987. The Department of Education and Science's science budget is now 25 per cent. higher in real terms that it was 10 years ago. Total United Kingdom spending on research and development has grown by 4 per cent. a year in real terms since 1983. Those facts are clearly unknown to the hon. Member for Dunfermline, East, and that is a pity.

Ms. Armstrong: Would the Minister like to tell us why R and D investment by the Government in the last year for which we have figures was 2 per cent. for the northern region and about 60 per cent. for the southern region?

Mr. Hogg: I am glad that the hon. Gentleman—[Laughter.]—that the hon. Lady has raised that, because I shall now discuss the difference, if any, between the north and the south.
Another curious mistake made by the hon. Member for Dunfermline, East was to refer to what he described as a gap opening up between the north and the south. He is clearly unaware of the latest unemployment figures, and he is clearly unaware that, in Wales, the north-west, Scotland and the north, unemployment fell faster in the past year than in London, the south-east and Greater London. Indeed, in the north and in Wales, it fell by almost 25 per cent. While we were having a little candour from the hon. Member for Dunfermline, East, why did he not tell us about the unemployment figures in his constituency? He did not, but I will. In the past 12 months, they have fallen by nearly 19 per cent.
The hon. Member for Dunfermline, East talked a great deal of nonsense about failure on the part of the regions to attract a high level of inward investment. What nonsense. Has he not heard of Toyota going to Derby and of Fujitsu going to Durham, and does he not know that, in Wales between 1984 and 1988, more than 250 overseas investment projects were created, resulting in some 31,000 new jobs?
The hon. Gentleman gave us stale jokes mixed with ignorance. In common with my hon. Friends, in particular my hon. Friends the Members for Esher (Mr. Taylor), and for Birmingham, Northfield (Mr. King), I have some questions that I would like to ask, because it is right that we should know what Labour party policy is.
Is it still Labour party policy to impose a payroll tax of half a per cent. on the pay bill? Is it still Labour party policy to hike national insurance subscriptions for employers? If the hon. Gentleman has forgotten where to find that, it is on page 33 of the policy review. Does the Labour party intend to oblige all employers to pay a minimum wage to some 4 million employees? If he does not know where to find that, it is on page 30 and 31 of the policy review.
Does the Labour party intend to have a national investment bank? Does it intend to have a network of regional banks? Does it intend to encourage pension trustees by changing the law to take account of the interests of regional economy? What are the answers to those questions? [HON. MEMBERS: "Answer."] Well, the House will draw its own conclusions. Either the Labour party has changed its policy in the past six months, or it Js trying to conceal it. Either way it is disreputable.
My right hon. Friend the Member for Henley made an extremely powerful speech, in the course of which he called for distancing the Bank of England from Government


policy. I am sure that he will agree when I say that that issue is essentially a matter for my right hon. Friend the Chancellor of the Exchequer. Perhaps my right hon. Friend the Member for Henley will forgive my asking this question, at least rhetorically, of him: if the German central bank is indeed such a model of independence, how much independence did it have when the German Government decided to amalgamate the ostmark and the deutschmark? I suspect, not that much. There is, however, one matter on which I think that my right hon. Friend and I can agree: that all responsible bankers, whether or not. they are independent, accept that interest rates are the only effective way to bear down on inflationary pressures. From that perspective, it is policy, not institutions, that matter.
My old sparring partner, the hon. Member for Warrington, North (Mr. Hoyle), referred to training. He made a stirring call for more training, as did the hon. Member for Truro (Mr. Taylor). We all agree about the merits of training. That is why we are putting policies in place. However, their speeches would have been a great deal better had they referred to the facts—for example, to the fact that industry is spending £18 billion on training, that the Government are setting up training and enterprise councils with budgets of £2·5 million, that we have introduced the core curriculum, that we have placed increased emphasis on science and engineering in higher education. We can all quarrel about policy adjustments, but to talk about training without mentioning these elements is, frankly, to admit ignorance on a grand scale.

Mr. Hoyle: The hon. Gentleman has made great play of education and training, but does he not agree that Siemens in West Germany has trained more graduate electrical engineers than are are trained in the whole of the United Kingdom?

Mr. Hogg: That particular fact is not in my head. However, the hon. Gentleman is in no position to talk about facts. During the five minutes of his speech that he spent on training, he failed to mention any one of the four facts that are central to the issue that I have just mentioned. He failed to mention the very encouraging downward trend in unemployment in his constituency, although he whinged about that. Unemployment in his constituency has fallen by about 18 per cent.
The hon. Member for Warrington, North also taxed me about Sunderland and referred to the end of shipbuilding there. However, shipbuilding is a cyclical industry. During the decade that led up to the decision in December 1988 to end shipbuilding in Sunderland, there was a dramatic downturn in the Sunderland work force. That downturn was associated with subsidies and loss. The Government have put in place a closure package that involves remedial measures to the value of £45 million. We are creating a diversified and more prosperous economy in Sunderland.
My hon. Friend the Member for Croydon, South (Sir W. Clark) referred to the considerable improvement in industrial relations. He is wholly right. The facts deserve to be repeated. In 1989, working days lost were a third of the average during the period 1970 to 1979. The number of stoppages, at 672, was the lowest for about 50 years.
My hon. Friend the Member for Lancashire, West made an extremely powerful case in favour of Japanese manufacturers coming to the United Kingdom. In this, he

was supported by my hon. Friend the Member for Birmingham, Northfield, with whom I entirely agree that cars produced in the United Kingdom, albeit by Japanese-owned companies, are European cars and ought to be treated as such. We should welcome that fact, because it is having a dramatic impact upon our indigenous capacity. At the moment, we have a United Kingdom car production capacity of about 1·3 million vehicles. By the mid-1990s, this will rise to about 2 million. That gives us an opportunity of unique proportions, not least for component manufacturers. I am sure the House will be pleased to know that, in 1989, car exports to Japan rose by no less than 75 per cent. in value.
When hon. Members talk about foreign penetration of our car market, it perhaps behoves them to remember that it was between 1974 and 1979 that import penetration doubled to 56·3 per cent., and it has remained stable since that time.
The hon. Member for Coventry, North-West (Mr. Robinson) made two cardinal mistakes. He doubted the value of inward investment. I do not suppose that that feeling is shared by the employees of Nissan, Honda and Toyota or by the employees of Rheinhagen in or near his own constituency. Secondly, he did not mention the fall of 12 per cent. in unemployment in his constituency during the last 12 months. Moreover, he misunderstands the changes being undertaken by my right hon. Friend within the Department of Trade and Industry. The purpose of those changes is to make the delivery of services yet more effective.
So we come to the end of this debate, and I hope that hon. Members will read and reflect upon the terms of the motion standing in the name of the Leader of the Opposition. I have to say to the House that, for ignorance or lack of candour, or a combination of both, it takes some beating.
The right hon. Gentleman refers to the present rate of inflation. True, it is too high, but it is a quarter of the level achieved by Labour in August 1975, and it is destined to fall. He refers to the trade deficit, but he ignores the fact that we have just had the best export figures for 17 years. The right hon. Gentleman speaks of business bankruptcies. Does he not understand that business is a dynamic process, with firms opening and firms closing? What matters is the net figure. In 1988, over 60,000 more firms opened than closed, which is a fourfold increase over 10 years previously.
The right hon. Gentleman refers to redundancies. He appears not to know that since 1983 employment has risen by 2·9 million and that our unemployment rate is now two thirds of the Community average. He speaks of investment cuts. Has he not been told that, in the three years to 1989, business investment increased by over 40 per cent., the largest increase in any three-year period since the war? He refers to cuts in regional investment, but appears not to know that, over the last few years, the regions have seen a dramatic upturn in their prosperity and employment levels and have received a dramatic proportion of that inward investment from Japan and America, which rightly regard Britain as the most attractive of the European countries in which to establish their manufacturing businesses.
The Opposition should be ashamed of the motion. It exudes ignorance, it is couched in half-truths, it reeks of humbug and we should reject it with contempt.

Question put, That the original words stand part of the Question:—

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments), and agreed to.

MR. SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved,
That this House congratulates Her Majesty's Government on policies which have achieved the highest rate of economic growth in the European Community, the largest increase in manufacturing productivity of any major industrial country, and record levels of industrial output, investment and exports; welcomes the continuous fall in unemployment for 42 months, and the creation since 1983 of nearly three million jobs in the United Kingdom; and commends the resolve of Her Majesty's Government to bear down on inflation and to continue with the supply side policies which have contributed to these achievements.

Mr. Robert Hayward: On a point of order, M r. Speaker. You may have heard reports that this evening in Bristol 21 people have been arrested and at least three policemen injured during demonstrations by the extremists of the Left wing of the labour movement and the Socialist Workers party. Would you be amenable, Mr. Speaker, to a private notice question or a Standing Order No. 20 application tomorrow?

Mr. Speaker: I am surprised that the hon. Gentleman should ask that question in the Chamber, as he knows the rules for applications for private notice questions. I am not aware of what has happened in Bristol

Prevention of Terrorism

The Secretary of State for the Home Department (Mr. David Waddington): I beg to move,
That the draft Prevention of Terrorism (Temporary Provisions) Act 1989 (Continuance) Order 1990, which was laid before this House on 19th February, be approved.
The House is being asked to continue in force the Prevention of Terrorism (Temporary Provisions) Act 1989, which was given Royal Assent less than one year ago. I have no hesitation today in asking the House to agree that all the powers that require renewal should continue in force for another year. I do so because of the continuing threat of terrorism to the lives and property of the people of this country. All right hon. and hon. Members can rest assured that the Government have no intention of weakening our resolve to meet that threat or of ceasing to provide the security forces with the powers that they need. [Interruption.]

Mr. Michael Latham: On a point of order, Mr. Speaker. Surely a subject of this importance should he heard in silence.

Mr. Waddington: During 1989, the nation witnessed not only 62 further killings in Northern Ireland, including the murder of 23 members of the security forces, but the terrible incident at Deal in which 11 soldiers were brutally murdered, and the callous shooting of an RAF corporal and his baby daughter in West Germany. The Deal bombing caused the largest number of mainland deaths in a single Irish terrorist incident since 1974. In November, a car bomb in Colchester injured a soldier and his wife while another was placed in Kensington, but, by good fortune, did not explode. The bomb that exploded in Leicester last month could have caused many deaths and appalling injuries. There was also a bomb in Halifax.
No one can doubt that Irish republican terrorism continues to pose a deadly threat to the armed forces and to members of the public. The Prevention of Terrorism (Temporary Provisions) Act 1989 forms an essential part of our defences against that threat. I wish to take this opportunity to acknowledge once again the invaluable work and ceaseless vigilance of the security forces in Great Britain and Northern Ireland. The last year was marked by some notable successes, including the arrest of two men on the Dyfed coast just before Christmas, and of the arrest of several Iranians in Manchester and London at about the same time. Those cases are now sub judice and the House will not expect me to comment further. However, I can say that the Dyfed arrests were the culmination of a seven-week police operation in the most atrocious conditions, and our thanks should go to all the officers involved.
In December, we had the anniversary of Lockerbie and were reminded of the wickedness of international terrorism. It is right that I should say a word about co-operation with other countries, which now so often plays a part in counter-terrorist investigations.
In 1989 there was successful collaboration with the police in the United States of America, France and West Germany. Suspected IRA terrorists, and others who, it is thought, were seeking to supply them with weapons, were arrested in each of these countries. Co-operation in investigations is supported by regular exchanges of

information and ideas among Governments and their agencies, and the Trevi group is proving to be an increasingly useful forum.
The House will be grateful to Lord Colville for his fourth annual report on the legislation, and I am grateful to him personally. I am glad to say that he makes no criticism of the use of the executive powers of extended detention and exclusion, and is satisfied that any complaints made against the police for their use of the Act have been properly dealt with. This year, Lord Colville has carried out an investigation of the arrangements for implementing the Act at ports, and has found the standards of port controls acceptable.
I should mention three specific points that he raised in his report. First, Lord Colville says that some police forces seem uncertain about how their functions are to be exercised after 1992. I am pleased to have this opportunity to put the record straight. The Government remain committed to maintaining the system of police checks for counter-terrorist purposes which are operated under the powers in schedule 5 to the Act, and this is wholly in keeping with the Single European Act and the treaty of Rome.
Secondly, Lord Colville draws attention to the problem of preventing small boats being used by terrorists to bring people and supplies into the country. The difficulty is one of enforcement rather than any inadequacy of law. The police already enjoy sufficient powers under the Act to examine people entering the country, even by small boat, but we have to rely in the main on the vigilance and co-operation of boat owners and the general public for the powers to be brought into play.
Thirdly, it is, as Lord Colville observes, still too early to evaluate the effectiveness of the new provisions of the 1989 Act which provide powers to investigate, restrain and forfeit terrorist funds. The police have begun to use the new investigative powers, and since the Act came into force on 1 September, they have successfully applied for a total of 45 production orders. It is likely, however, to be some time before we can report that the full procedure has been used to obtain the forfeiture of terrorist funds.
There has understandably been interest in recent months in the safeguards available to suspects held under the prevention of terrorism legislation while they are subject to police investigation. There is a balance to be struck between the importance of having powers to increase public protection against terrorist outrages and the need to safeguard the rights of suspects. The legislation provides powers of detention and investigation which go beyond the ordinary criminal law and are necessary because of the nature of the terrorist threat; but this is not something which we accept lightly.
We believe that, wherever possible, the procedures for investigating terrorist suspects should follow those for suspects arrested under the Police and Criminal Evidence Act 1984—PACE. Indeed, those arrested under the 1989 Act are defined as being in police detention for the purpose of PACE. Lord Colville welcomes the recent extension of PACE procedures to Northern Ireland, and so do I. I also welcome the system of review of detention within the first 48 hours which is provided by schedule 3 to the 1989 Act, and it is helping to ensure that the reasons for detention are sound.
I am asking the House to renew the power to extend detention of terrorist suspects for up to a total of seven days because I believe that it is crucial to the operational


effectiveness of the police in these difficult cases. Because I so believe, I confirmed last year our decision to make a limited derogation from the European convention on human rights in Northern Ireland cases. We took the decision reluctantly and after the most serious consideration, but it would have been quite wrong for us to shrink from making it.
I announced on 1 March that an experiment would begin in the Merseyside and Metropolitan police forces in taping summaries of interviews with terrorist suspects, together with suspects' comments on the summaries. These interviews are at present excluded from the provisions of PACE code (E) on tape recording. We have had to take account of the need to protect sources of intelligence and police operational methods, and that is why we have not introduced tape recording on the same basis as in other cases in which the whole interview is taped.
The experiment is planned to run for two years. It will be monitored by the Home Office research and planning unit, and evaluated by a steering committee on which the Law Society and the Criminal Bar Association, as well as the police and the Crown prosecution service, are represented.
Last year saw the 20th anniversary of the deployment of troops in Northern Ireland. The prevention of terrorism legislation has been in existence for 15 years. We are certain that, without it, the work of the security forces in countering terrorism would have been more difficult and less effective, and a it the appalling toll of casualties would have been greater still. As time goes on, we are more—not less—resolved to defeat terrorism. Any signs that the determination of the citizens of the United Kingdom who believe in the rule of law is weakening will serve only to encourage those who respect neither law nor democratic government.
For many years, the Opposition recognised this and voted each year to renew the legislation that they had introduced. Then suddenly, in 1982, they changed their mind. Why? Not because terrorist killing had ceased; not because the threat to our armed forces and civilians was over. It was not the terrorists who had changed; it was the Labour party, and in so doing it lost any claim to be considered a responsible Opposition.

Mr. Jonathan Sayeed: Will my right hon. and learned Friend give way?

Mr. Waddington: Not just now.
Tonight the Opposition could change their mind again and show that they are made of something and are fit to govern. But I am pretty sure that they will not, and I shall certainly do my level best to keep the public aware that when it comes to the most fundamental issues—the country's defence against attack from without and from within—the Opposition cannot be trusted.
I commend the order to the House.

Mr. Roy Hattersley: The Home Secretary began by reminding the House—very properly, in my view—of the terrorist outrages that have been perpetrated during the year since we last debated this subject. He went on—again very properly, in my view—to

reassert the Government's determination to defeat terrorism. In that resolve the Government are certainly supported by the Opposition.
There was, however, an omission from the speech of the Home Secretary. At no time did he relate the Prevention of Terrorism (Temporary Provisions) Act to the battle against terrorism. At no time did he tell us how the Act was helping in that campaign. He asserted it—he announced that it was his belief—but I think that he will come to realise, as the days and months go on, that the fact that it is his belief neither makes it necessarily true nor convinces the House that what he has to say is accurate. He made no attempt whatsoever to indicate a rational relationship between what the Prevention of Terrorism (Temporary Provisions) Act does and the defeat of terrorism.

Mr. Waddington: It was necessary to the fight against terrorism for the same powers to exist before 1982.

Mr. Hattersley: I shall come to that point. As the Home Secretary may well remember, when the powers passed into law they were called temporary powers—as they are now, but perhaps the title was rather more appropriate in 1972—and, as public statements confirm, they were intended to meet the immediate emotions and circumstances surrounding the Birmingham pub bombing. Hardly any Opposition Member who voted for them then—and I was one—contemplated for a second that 15 years later we should put the same legislation on to the statute book year after year. Whether or not the Home Secretary understands it, there is a substantial difference between emergency powers taken at a time of real crisis and emotion and their passage into permanent law.
The Home Secretary reminded us that this was our first opportunity to debate the Prevention of Terrorism (Temporary Provisions) Act since the Government announced their response to the judgment of the European Court of Human Rights on the case of Terence Brogan. The court's judgment was that to detain suspects for up to seven days without charge and without judicial review was in breach of the European convention on human rights, but, notwithstanding that clear breach, the Government have chosen to go ahead with their policy.
It is no good the Home Secretary saying that there are safeguards for suspects because Ministers carry out reviews; the only safeguard for a suspect against arbitrary arrest is a review by some authority outside the Government who arrested him or her. If the Government are wrong in the first instance, they may be wrong in the second: that was the judgment of the European Court of Human Rights.
The fact that the Government have chosen to ignore or defy that judgment—let hon. Members describe the derogation as they will—is in itself cause for us to vote against the order. A second cause is the renewal of the powers that, in the words of a previous Attorney-General, amount to "internal exile"—the exclusion orders. Both grounds—detention without charge and without judicial review, and internal exile to parts of the United Kingdom—involve the principle of civil rights.
Let me emphasise, however, that we also have pragmatic arguments against the continuation of the order for a further year. The defeat of terrorism in Northern Ireland, to which I believe every hon. Member is committed, certainly requires strong action by the Government——

Mr. Sayeed: May I ask the right hon. Gentleman a specific question, so that the Labour party can establish its credentials as an anti-terrorist party? Is he aware of the existence of a Mr. Kuomba Balogun? Mr. Balogun lives in Bristol, and is the chairman of the Bristol, West Labour party. He has been convicted of causing grievous bodily harm, firebombing police stations and assaulting police officers. In September 1987, he was a guest of Gerry Adams in Belfast.
Is the right hon. Gentleman aware that Mr. Balogun has just called on the IRA to assist the ANC in the same way in which Libya helped the IRA? Is it not essential for Labour to repudiate Mr. Balogun's actions, and to kick him out of the party?

Mr. Hattersley: First, I do not believe that we need to establish our credentials as an anti-terrorist party: our record speaks for itself. Secondly, I think that it is a misuse of the procedures of the House to ask me or any of my right hon. Friends a question about a gentleman of whom I have never heard in my life.

The Minister of State, Home Office (Mr. John Patten): The right hon. Gentleman is the deputy leader of the Labour party.

Mr. Hattersley: The Minister of State, who is known for his gregariousness, reminds me that I am the deputy leader of the Labour party. Ours is a mass movement; I cannot know every member of the party, and the idea that I should be required to comment on facts launched at me in such a way and at such a time of night about an individual of whom I have not heard until this moment really is a misuse of our procedures. I am sure that it will get the hon. Gentleman's name into his local newspapers tomorrow, but it is not how a responsible Member of Parliament behaves——

Mr. John Patten: The right hon. Gentleman has said that, in his position as deputy leader of the Labour party, he cannot know what is going on in every part of the country. I agree that it must be difficult to know what is going on in every part of any political party, but I am sure that, in his normal assiduous way, the right hon. Gentleman reads the Order Paper on which there has been an early-day motion about Mr. Balogun for the past fortnight. The right hon. Gentleman should pay attention to what is going on.

Mr. Hattersley: The idea that I should spend my time reading early-day motions tabled by Conservative Back Benchers is simply preposterous. The Minister of State recognises pomposity when he sees it, and I am sure that he would be well advised as would the House—to allow us to proceed to consider these enormously serious matters in a serious way——

Mr. Quentin Davies: rose——

Mr. Hattersley: Not for a moment. I do not believe that anybody can seriously argue that an appropriate way in which to discuss the order is that suggested by the hon. Member for Bristol, East (Mr. Sayeed).
I return to my point which, despite the interruptions, I gladly reiterate—that the defeat of terrorism requires strong action by the Government and that we are prepared to and will support such strong action by the Government. However, the defeat of terrorism also requires the whole-hearted co-operation of the vast majority of

law-abiding Irish men and women. To achieve that co-operation, the Government must convince them that the Government are themselves operating in and about Northern Ireland with proper respect for the law. They must convince the men and women of Northern Ireland——

Mr. Quentin Davies: rose——

Hon. Members: Sit down.

Madam Deputy Speaker (Miss Betty Boothroyd): Order.

Mr. Hattersley: They must convince the men and women of Northern Ireland that their Province is treated like any other part of the United Kingdom and that the normal processes of equality before the law apply in Northern Ireland just as in the rest of Great Britain.
I believe—and I think that many men and women who reside in the Six Counties also believe—that exclusion orders are inconsistent with the view that Northern Ireland is an integral part of the United Kingdom, because the exclusion orders, which the House is being asked to endorse, allow the Government to say that a man or a woman is not fit to live in Scotland, Wales or England, but can be required to live in Northern Ireland. Anyone who ever talks to the law-abiding majority in Northern Ireland knows the resentment that is built up by that sort of policy.
I re-emphasise that, as well as the issues of principle that the Home Secretary raised, such as the denial of civil rights, the objections to many of the powers of the Prevention of Terrorism (Temporary Provisions) Act also relate to the arguments that they provide to those people who wish to argue that this Parliament will impose policies on Northern Ireland, that it would not contemplate on this side of the Irish sea—

Sir Alan Glyn: Does the right hon. Gentleman agree that circumstances are entirely different on this side of the Irish sea from those in Northern Ireland and that the dangers are much greater in Northern Ireland, which means that the provisions must therefore be slightly different?

Mr. Hattersley: Perhaps the hon. Gentleman will reconsider the point that I was attempting to make—that it is necessary to defeat terrorism by convincing the law-abiding majority in Northern Ireland that the Government here in Westminster operate according to the normal canons of the law. Measures such as this do not give that impression and do not create that confidence in the British legal system.
I believe that the Government understand that. I have heard the Home Secretary's predecessor say that one reason why the Government reject the idea of internment is that it would alienate many men and women in Northern Ireland who must be on the side of the forces of law and order. However, in a number of particulars—such as the exclusion orders and detention without charge—the Government are prepared to risk that alienation. They do it in such a way—as in the Home Secretary's speech—that it makes their policy a liability in the real political battle against terrorism—

Mr. Waddington: rose——

Mr. Hattersley: When the Home Secretary intervenes, I hope that he will not say that we do not have to win the


political battle against the terrorists as well as the legal battle. I subscribe to the view expressed by the Secretary of State for Northern Ireland when he talked about the need to win the political arguments as well as the military arguments. Those two things must be borne in mind tonight.

Mr. Waddington: I have listened carefully to the right hon. Gentleman's arguments, but he has not began to explain why they are valid now but apparently were not valid until 1982. What has changed which makes the right hon. Gentleman say that certain arguments are now valid which were rubbish before 1982?

Mr. Hattersley: I shall give the Home Secretary the answer that I gave him when he asked the question 10 minutes ago. If he asks me again, I shall give him the same answer the next time. These emergency powers, which are called temporary and were intended as temporary, were, as Hansard shows, meant to meet the special emotions as well as the circumstances of the Birmingham pub bombing. I well remember the then Home Secretary saying that it was necessary to demonstrate at that moment the strength of our feeling. He said that it was necessary to do so to protect the Irish community in Britain. The circumstances of the year of the Birmingham pub bombing no longer exist. That is the difference.
Before I develop—if the Home Secretary will allow me—our arguments against the two major powers, detention without charge and the exclusion orders, I make it clear that we welcome and support parts of the Act and parts of the renewal of the Act. We support part III, which provides for the confiscation of terrorist funds. We made that clear when the Act was passed, and we support it again tonight.
I also welcome the Home Secretary's statement last week about the central provision of the Act—internment without charge. Last week the Home Secretary announced that what he described as "suspected terrorists"—I presume that by that he meant people detained under the Act—would in future have limited tape recording of their interviews in police stations. They would be limited in scope and in the area where the experiment was held. That provision is very much to be welcomed.
In previous debates, we have called for the protections provided under the Police and Criminal Evidence Act to be extended to men and women detained under the PTA. When we did so two years ago, we were told that that was an example of how we were soft on terrorism. The Home Secretary has moved a step in our direction and I welcome that. I hope that we shall continue to examine more ways in which men and women detained under the Act can have the proper protection that a civilised country provides.
I am particularly glad that the tape recording, although limited, will end the intolerable practice that Sir Leon Brittan, then Home Secretary, described to the House. I asked him:
Is he saying that it is right … to detain innocent people without charge for the purpose of obtaining information
He replied:
It has been made clear … that that is a legitimate … use of the power."—[Official Report, 24 October 1983; Vol. 47, c. 56.]
Both on the Government Front Bench and on Opposition Benches, there is now wide agreement that it is

intolerable to detain innocent men and women without charge as part of an intelligence-gathering operation. The tape recording of interviews, although limited, will not make that practice impossible, but it will certainly make it more difficult.
It is enormously important to remember when we discuss the principle of detention—which means detention without charge for as long as seven days—that we are talking about the detention of innocent men and women. In their statement to the European Court of Human Rights, the Government said that it would be impossible to reveal the evidence on which charges are made without prejudicing security by revealing the sources from which the evidence emanated. In most cases of detention under the PTA, there is no information leading to a charge. In most cases of detention, no charge is ever made. Last year, 163 men and women were detained under the powers that the Government now wish to renew. Only 19 were even prosecuted. Of the 19, eight were prosecuted for offences that were not involved with Northern Ireland terrorism.
The Home Secretary said that, in his annual review of the workings of the Act, Lord Colville had found no criticism to make of the executive action in applying the Act. That is true but it is a little disingenous of the Home Secretary to put it in those terms, for last year, when considering the principles on which the Act was based—not the way in which the principles have been applied since the Act became law—Lord Colville referred to
the worrying indications in the level of charges brought as a proportion of detentions made under the Act.
What Lord Colville said about detentions and prosecutions was that men and women detained outnumber intolerably the number of men and women who are actually charged and against whom a case is made.

The Attorney-General (Sir Patrick Mayhew): The right hon. Gentleman has based his case on principle. Will he say on what principle he assesses the European Court of Human Rights' implied judgment that four days' detention before charge is all right, but seven days is wrong in principle?

Mr. Hattersley: Four days happens to be three days shorter than seven days. We all accept that detention occurs under normal criminal procedure. We all accept that there may be a brief period before the charge is made. What is intolerable is when that period is prolonged. I could ask the Attorney-General exactly the same question: what is the difference between two days and seven days? At the end of two days, the powers have to be renewed. The implication of the provision, which provides for two days to be renewed to seven, is that the longer the period, the greater the offence.

The Attorney-General: rose——

Mr. Hattersley: The right hon. and learned Gentleman can try again if he wants, with the greatest of pleasure.

The Attorney-General: With great respect, the right hon. Gentleman may have forgotten that, under PACE, the time limit is 96 hours, subject to the safeguards of the approval of Her Majesty's court, obtained first at 56 hours and then at the ultimate period. The safeguards are slightly different in detention in Northern Ireland, but they are stringent and require the personal approval of the Secretary of State. I am not sure where the point of principle lies.

Mr. Hattersley: I repeat that the point of principle is that, the longer a man or woman is detained without charge, the worse the offence. The longer a man or woman is detained without judicial review, the greater the offence. We all accepted, in PACE, that an initial period may be necessary. It is the extension of that period which is wrong in principle.
I hope that the Attorney-General will struggle to remember that he is not simply a member of the Government but a Law Officer. It is unacceptable to say that there are safeguards when the Minister who approves the detention in the first place also approves an extension of that detention. The safeguard must be an independent authority, not the Minister who took the original decision.
One of the differences between detention under this Act and normal procedures of arrest and charge, is the discrepancy, to which I referred, between the number of people detained and the number who get into court and have a charge made against them. Of the 163 cases of men and women detained without charge last year, in 144 cases there was not even sufficient evidence to bring a case into court. I suspect that that disturbs the Attorney-General. If it does not, he does not hold the views on the judical system that I have suspected him to hold for a long time.

Mr. Ken Maginnis: Does not the right hon. Gentleman acknowledge that the differential between those taken into custody for questioning and those charged has more to do with the inadequacies of the law in dealing with terrorism? Does not he acknowledge that such things as intimidation and the reluctance of witnesses to come forward to give evidence have much to do with the differential that he mentioned? I can illustrate that by reminding him that, of 183 murders in my constituency by the IRA only 15—less than 8 per cent—have been resolved through the courts. Is the right hon. Gentleman trying to tell me that the other 169 murders did not really take place or that no one was responsible for them?

Mr. Hattersley: During a series of debates on this subject, I have always been reluctant to take issue with the hon. Gentleman, because I know of the suffering in his constituency and I understand the strength of his feeling about it. I do not regard it as a giggling matter but as a matter of great seriousness, and I think that the hon. Gentleman knows that those are my feelings.
But the point that the hon. Gentleman made, with force and with feeling, is dangerously near to the position that I was about to offer some criticism of—the feeling that we cannot convict such people within the rule of law but we know they are guilty so we must do something about them. It is enormously dangerous in a free society to talk or think in that way.
I understand the penalties of there being men and women who we have strong reason to believe are guilty but whom we cannot convict through the normal processes. But during the past 20 years, so many crimes have been committed in the judicial system by people who knew somebody was guilty, but could not provide the appropriate evidence at the time, that that is a principle which we must avoid at all costs. One of my complaints about the Act is that it works on the principle: there are men and women whom we cannot convict under the normal process of law, so let us invent abnormal processes of law to make sure that they are convicted.
Let me deal briefly with what I regard as the second denial of justice involved in the Act—the continuation of exclusion orders. The Home Secretary—he will forgive me a second time for calling him disingenuous—told us that Lord Colville has no objection to the way in which exclusion orders are being administered. The Home Secretary will recall that, in his basic report last year, Lord Colville objected to the existence of exclusion orders, so he is a rather strange witness to call in defence of what the Home Secretary has done during the past year. Both Lord Colville and Sir Cyril Philips, who were asked to examine the principles of the Act, came down against exclusion orders. Will the Minister of State, who I believe is to reply, give us a cogent explanation of why exclusion orders, with all the offence that they cause to Northern Ireland, are still necessary?
Only nine exclusion orders were made last year, but that did little or nothing to reduce resentment, because every traveller from Ireland to England is required to answer questions on the basis that they may be subject to exclusion orders. I know from experience that anyone who has been subjected to that experience finds it difficult to believe that Irishmen are treated in Britain in the same way as citizens in other parts of the United Kingdom.
Opinions against exclusion orders are so strong and the use of them is so rare that I ask again why the Government persist in causing deep offence by maintaining the power. The answer, I fear, is the same as the answer to the general question about the Government's support for the Act. The Act is intended to create the illusion of tough action. It is exemplary and declaratory rather than necessary. It is intended to allow the Home Secretary and people of his ilk to make the sort of perorations that he made this evening, with all their lack of justification, logic or intellectual content.
If the Home Secretary contests that point, I hope that he will answer a single question about the need for the powers, based on the way in which the powers are used. Two years ago in my constituency, an elderly consultant psychologist was detained under the powers of the Act. She was eventually charged with an offence concerning explosives and was acquitted. Why was it necessary, when it was suspected that explosives, or those who might use them, were being hidden or harboured in the suburbs of an English town, to arrest under the powers of the Act rather than under the normal powers of the criminal law?
When I asked the previous Home Secretary exactly that question, he answered with an example of his own—a policeman who had been shot in cold blood in his constituency. Tragically, several policemen are murdered every year in Britain and the criminals responsible are pursued with proper determination and they are usually caught and convicted. We do not need the Prevention of Terrorism (Temporary Provisions) Act to do it. The Act i now often used for purposes that could be wholly met by the common and criminal law.
The only possible justification for continuing with the Act is the declaratory purpose that I have described, or something that I regard as much more sinister. It was the revelation of a Home Office Minister, not the right hon. Member for Oxford, West and Abingdon (Mr. Patten), who defended the special powers by saying:
under PACE the powers of arrest can be exercised only where a constable has reasonable grounds to suspect that a particular offence has been committed or is about to be committed.


He could not then have gone on to be clearer about his view of why the Act is necessary. He said that it made possible the arrest of a suspect
where one cannot prove, or does not have reasonable grounds to suspect, the commission of a specific … offence."—[Official Report, Standing Committee B 10 January 1989; c. 295.]

In a democracy, men and women are not detained for seven days without charge when the police cannot demonstrate reasonable grounds for suspicion that they have committed or are about to commit a specific offence. The Prevention of Terrorism (Temporary Provisions) Act is intended to provide that unacceptable power. For that reason, it is unacceptable, and I shall vote against the order.

Mr. Barry Porter: I agree with the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) about what happened in 1974 and 1976, when the Acts were passed. Nobody thought that we would be debating them again in 1990, and it is regrettable that we have to do that. He also made the point that it is not possible to prove that the Prevention of Terrorism Act deals with the problem of terrorism. That is true, but it is also not possible to prove the contrary.
Common sense dictates that the Act restrains terrorists and potential terrorists. It may or not be true, but it is my view that it does. I would not wish to be in the House in a year's time—when, or if, the number of murders or terrorist activities had doubled—and have to say that I was terribly sorry but I was wrong, and the Act should be reintroduced. I would not wish to have to face the families and the relatives of those people who had been killed.
This is a matter for caution, as was said in 1974 and 1976. Caution should also be expressed now, because the position has not got much better. I am sure that, if the right hon. Member for Sparkbrook examines his conscience, he may decide that that is not an unreasonable view. I hope that there will come a time when the Act is not necessary, but the only way it will become unecessary is if people in Ireland and in mainland Britain believe that terrorism has no result.
I ask hon. Members to consider the speech made by the Leader of the official Opposition—Fine Gael—in the Dail, advising the Taoiseach to say that there was no purpose in pursuing the ideal of a united Ireland. That is the most positive and sensible statement that a Republican politician has made in recent years, and I trust that the Taoiseach will take advantage of that advice.
I do not believe in negative Unionism—the wish that Northern Ireland should not be part of the Republic. I believe in positive Unionism—that the people of Northern Ireland wish to be citizens of the United Kingdom—and that is a very different thing. I use every possible opportunity and any available forum to advance that view, but it is not much good for an English Conservative and Unionist to advance that view almost by himself. It is important that those who represent the Unionists should use every forum available to them to advance that view, whether it be in the House or in the Anglo-Irish parliamentary tier. I know of the difficulties that my right hon. and hon. Friends have in that direction. Difficulties exist, but they should be overcome.
That tier was to some extent a success last week, but it had one weakness—the Unionist representatives were not present to advance the view which I tried to represent in my own poor way.

Mr. Martin Flannery: We are discussing the renewal of the Act. The hon. Gentleman made a fundamental point: that if the Act were repealed and the killing increased, we should have to legislate again. Does he attribute the reduction in the number of killings to the Act, and is he saying that, if it had to be reintroduced it would stop the killing?

Mr. Porter: I cannot have made myself clear. I said that it cannot be proved either way, but that I should not want to have to prove it one way or the other by having an increase in murders and acts of terrorism.
The only way in which the Unionist cause can be advanced is in any forum that is available. It would be regrettable if the Unionist politicians in the House—again I repeat the phrase: those whom I treat as my right hon. and hon. Friends—did not take the opportunity to advance the cause that I hold dear, and that I know they hold dear, for domestic political reasons. There is a forum. There is a reason for Unionist Members of Parliament to overcome their local difficulties and to stand up and speak to that in which they believe. Only then will the cause of positive Unionism lead to the defeat of terrorism. Only then will the Act be unnecessary.

11 pm

Mr. Robert Maclennan: The Home Secretary began the debate with a straightforward account of the events of the past year. From what he said, it is plain that the threat of terrorism has in no way diminished since we previously debated these matters. The bombing at Deal and the other car bombs on the mainland of Great Britain show that we are faced with a present threat, close to home. The outrages that have affected our troops in Germany show that they are at the forefront of the battle.
However, it is right to consider the legislation on its merits and with due regard to its effectiveness in dealing with the threat. It will not do simply to treat the legislation that we seek to renew tonight simply as a totem, as a test of whether one is opposed to terrorism. I thought that the Home Secretary's remarks at the end of his speech, in which he attacked the Labour party, came perilously close to suggesting that it was such a totem. There was some deficiency in the way in which he deployed the case for the continuance of these extensive powers. The deficiency was in his argument as to the effectiveness of these powers to combat terrorism.
Throughout the operation of these powers, my right hon. and hon. Friends have supported their renewal with consistency and in the belief that they play a significant part in dealing with the terrorist threat. We listen to the debate and participate in it with a strong sense that fundamental rights and freedoms are important. If we are to abridge them in the serious manner that is provided for, particularly with respect to the power of detention for up to seven days and the exclusion powers that provide for internal exile, we have to be satisfied that they are effective.
The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) failed to address the attitude of those who are responsible for policing and the attitude of Lord Colville, who was charged with the review of these powers and their effectiveness. It is quite clear that, according to the evidence in Lord Colville's report, the powers are effective and need to be renewed. He went so far as to say that he considered that they would probably have to be in place for some time to come.
Who are we, who are not privy to the difficulties of policing, to say that these powers are not effective? The mere fact that prosecutions do not inevitably follow from detention is no evidence that deterrence has not been at play. Who are we to say that the exclusion powers, which are so draconian and unwelcome, do not result in those who are organised for terrorism remaining within the Province, where their movements can be tracked and


where the policing of them is much more straightforward than it could be if they were moving freely round the British Isles?
No one likes these powers. The question that the right hon. Gentleman must address is whether they are effective, and he did not even touch on that.
Lord Colville, in the context of detentions, drew some attention to what he thought was striking. He spoke in paragraph 4.3 of the power to detain beyond the first 48 hours and pointed out:
All but nine extensions were for two days, one was two days and 10 hours, four for three days, two for two days plus one day and two for three days plus two days. I have seen nothing about these cases which requires comment, except for one case in Tayside.
This case concerned six men who were held for a period under the Act and beyond the normal Scottish six-hour limit. Lord Colville went on to say:
At a trial in the High Court in Perth all six were convicted and sentenced to between seven and 16 years in prison.
That seems to be a pretty remarkable testimony to the effectiveness of these powers, and the fact that Lord Colville thought it appropriate to draw attention to that case shows that he thought it was of significance. Since we are not privy to the policing, the interrogations or the evidence in the cases that come before us, the evidence of Lord Colville as to the effectiveness of what is being done under this Act is bound to carry immense weight with the House.
Since we last debated this, the Brogan case denouement has occurred. The Government have derogated effectively and for the time being on the ground that it is not possible to meet the requirements of a judicial interposition within the seven days. I am bound to say that I deeply regret that, and am not wholly convinced that it would not be possible to meet the requirements of the European convention. I understand that the inquisitorial procedures of continental jurisdictions are very different, although there are some analogues in the Scottish system which, however, would not be regarded as acceptable within this legislation to bring it within the European convention. But I wonder whether it is possible for this matter at least to be reviewed during next year, for I cannot understand, and do not believe any good reason has been given for, the failure to meet this requirement of the European convention.
It must, however, be said that this derogation is not unique in the history of our emergency powers. The Labour Government derogated in 1978, at that time without the opposition of the House, and I do not think they had any other choice. There is not a particularly strong case for criticising the derogation on this matter.
The exclusion orders are undoubtedly the part of the legislation that give rise to the greatest anxiety and justifiable concern that they should be properly scrutinised and not used lightly. The evidence produced by Lord Colville on the process of appeal to the advisers of the Home Secretary, which was relied on successfully in a number of cases leading to the termination of exclusion, shows that that process of review is by no means a fig leaf. It is an effective control over the abuse of those powers.
I do not know whether the right hon. Member for Sparkbrook has availed himself of the opportunity to discuss with the police the use of exclusion powers or the practical difficulties for policing in Great Britain which

would flow from the abandonment of those powers, but my discussions with the police leave me wholly persuaded that they are a practical necessity.
I do not believe that the threat to this country from terrorism has diminished since we last debated these provisions. The arguments that led us to support the powers in the past remain strong, but the argument for continuing an effective scrutiny and appeal procedure is also strong. We must regard the provisions as temporary powers to be renewed only following the most comprehensive and detailed review by Lord Colville or some other Government appointee and by Parliament. It is wholly correct that the Home Secretary should come to the House to seek such draconian powers and to seek the support of Parliament for their use again. He will enjoy that support from my right hon. and hon. Friends.

Mr. Julian Brazier: As my right hon. and learned Friend the Home Secretary said, there is a need to strike a balance between the rights of the individual and the need to protect innocent members of the public and the lives of our security forces.
When I visited Northern Ireland two years ago, I was struck by the fact that the UDR regiment which I visited—a unit of only 400 or 500 men—had lost 28 men, nearly all of them killed while off duty, since the troubles began. The House is not divided on intention. With only one or two exceptions, all right hon. and hon. Members want terrorism to be defeated. The division in the House concerns the willingness to do something about it.
The IRA does not believe that its members are common criminals. It uses the language of war, talking about "active service units", "staff officers" and "adjutants". Its members use the phraseology of war. I do not know a single example anywhere in the world of an organisation of the size and strength of the IRA that is organised and equipped to the same extent as the IRA having been defeated within the confines of the ordinary criminal law. But that seems to be what the Labour party is suggesting as the way to tackle the present problem. I do not know an example of such a threat even having been contained, let alone defeated, within the confines of the ordinary criminal law.
The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) repeatedly mentioned the principle of equality—the idea that we should treat people in Northern Ireland in exactly the same way as those on the mainland. I am sure that, in our hearts, we would all like to adhere to that principle, but surely, whichever of the provisions we are considering, the right that people in Northern Ireland must want most—I am glad that several right hon. and hon. Members representing Northern Ireland constituencies are here—is the right to stay alive and live their lives in an ordinary fashion.

Mr. Hattersley: How does the hon. Gentleman think that that right would be preserved by exclusion orders which send terrorists back from Britain to live among the people of Northern Ireland?

Mr. Brazier: The right hon. Gentleman said that such orders had been rarely used. [HON. MEMBERS: "Answer."] To the extent that they have been used—[Interruption.] Do Opposition Members really want to hear my answer? The order gives the Secretary of State power in rare cases


—such provisions have been used only rarely—to interfere with the movement of specific terrorists in the course of specific operations. On those rare occasions when they have been used, they have no doubt been used to good effect to prevent certain operations.
But the basic purpose of all these provisions is to try to contain and defeat terrorism. If they are not fully effective, it may be necessary to consider strengthening them. When, last year, we took steps to strengthen them, Labour Members did not support us. Those on the Opposition Front Bench decided to abstain, but 50 Labour Members voted against our proposal.
It has become too much of a charade that, year after year, since the Labour party changed its colours in 1982, it has been taken for granted that the Labour party would be against the renewal of these provisions. It is wrong that we should take that for granted. The country should appreciate that, while Labour Members say fine things about intentions, they are firmly against any action on terrorism.
I commend the order and urge the House to support it.

Mr. Rupert Allason: I congratulate the Home Secretary on introducing the measure and in particular on introducing—[Interruption.]

Madam Deputy Speaker: Order. Only one hon. Member at a time may address the House.

Mr. Allason: I also congratulate my right hon. and learned Friend on introducing an aspect of PACE—the Police and Criminal Evidence Act 1983—into the prevention of terrorism legislation. The idea of recording—and, I hope, eventually video recording—will be of great assistance, not just in obtaining convictions but in protecting the rights of police officers who conduct investigations, particularly during interrogations at police stations. An advantage of PACE tape recordings is that we have been able to get away from suspects' claims of having been "verballed". I hope that it will be successful if it is extended to counter-terrorism measures.
I offer a word of caution to my right hon. and learned Friend. The key to beating the Provisionals or any other terrorist group is good intelligence. There have been several examples of poor intelligence. He mentioned in his summary of recent cases the suspects arrested at Dyfed. It would appear to many observers that that occurred not as a consequence of good intelligence work but because of the cock-up theory, as opposed to the conspiracy theory, of history. It was an example of people being vigilant and reporting the information to the police, with a surveillance operation then being mounted. In other words, it did not originate from good intelligence.
Similarly, more than a year ago, two photographs taken by Provisionals of themselves for false identity documents were found in a flat in south London. Those photographs were widely distributed, yet it seems that one of the suspects was on the loose in Nottinghamshire and the north of England. That, too, was an example of poor intelligence.
I urge the Home Secretary to consider undertaking a serious review of the performance, structure and role of the Security Service. I hope that a consequence of the changes that have taken place in eastern Europe will have been a change in the Security Service's targeting of eastern

European embassies. If we can move some of the counter-intelligence surveillance experts who keep suspect intelligence officers from the eastern bloc under surveillance to counter-terrorist duties, it will be extremely useful.
I have one small plea. In the post-Lockerbie era, it is clear that not only intelligence, but co-operation between intelligence services of different countries, is vital in the fright against terrorism. I regard it as a disappointment that the European security group, which meets regularly in Brussels and elsewhere to discuss common security problems, includes Canada and Israel, but excludes the United States. I hope that its membership will be reconsidered as soon as possible. I commend the motion to the House.

Mr. Jeremy Corbyn: I oppose the order. I draw to the attention of the House the fact that the first person in this country to be arrested under the Prevention of Terrorism Act was Paul Hill, a constituent of mine, who was arrested after the Guildford arid Woolwich pub bombings. It later transpired not only that he was not in Guildford or Woolwich and, therefore, did not plant any of the bombs—he was not guilty and could not have been—but that the other three who were imprisoned as a result of confessions that were extracted from them under the Prevention of Terrorism Act could not have been guilty. They served 15 years in prison and an enormous campaign was mounted for their release. They were released because of that campaign, the widespread national and international support that they received arid the admission that was finally made by the Director of Public Prosecutions that he had no further evidence to offer against them. Lord Lane acquitted them and the Home Secretary appeared at the Dispatch Box to make a statement on the acquittal.
I remind the House that at the time that Paul Hill, Gerry Conlon, Paddy Armstrong and Carole Richardson were arrested and convicted, many hon. Members called for the restoration of the death penalty. Had the death penalty been restored, we should have been talking about a royal pardon for four people who had been wrongly executed.
I also remind the House that the use of confessional evidence, which is the basis of the Prevention of Terrorism (Temporary Provisions) Act, has led to the imprisonment of the Birmingham Six, who have now served almost 16 years in British prisons. I have visited them in prison several times. It is a humbling experience to go to a prison and to talk to people about all the things that we have done in the past 16 years of our lives when the only experience that those six men have had is being inside a series of British prisons—and being badly treated in them initially.
I am convinced that no one in the Home Office or in the Government believes that the Birmingham Six are guilty. We know that there is new evidence which the Home Secretary is considering. I hope that the Home Secretary will give us an idea tonight of when he will be able to reply to the new evidence that has been submitted on behalf of the Birmingham Six.
The House will commit a serious act if it passes this legislation. We shall be saying that it is all right to imprison people on the basis of confessional evidence, to hold people without recourse to legal assistance, to have


the principle of internal banishment within the United Kingdom of Great Britain and Northern Ireland, to fly in the face of a great deal of legal and judicial opinion and to set ourselves apart from what we consider to be civilised legislation anywhere else in the world.
My experience of the Prevention of Terrorism (Temporary Provisions) Act is that it has nothing to do with the prevention of terrorism and everything to do with policing and patrolling the Irish community in this country. I have lost count of the number of occasions that I have had telephone calls late at night from Irish people who live in my constituency, who were expecting a son, a daughter, an uncle, an aunt or a father to come across to visit them from Dublin or from Belfast, but who find that they have not arrived. They ask me, "Do you know where they are?" I have no idea where they are. We then start an amazing series of telephone calls to find out whether someone is being held under the Act. A Kafka-like mystery surrounds it and it is not clear whether that person is being held until lawyers make contact and eventually application is made for a writ of habeas corpus.
If we are serious about a judicial legal system and about a system of real justice, we should not agree to the order. It flies in the face of everything that we understand about justice. Too many people are in British prisons because of confessional evidence and because of the Act. Many people have been stopped, searched, held, interrogated and subsequently released without any charge, as my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) said. The Act gives the power to investigate, to hold without due process and to collect a great deal of evidence about the activities of the Irish community in England, Wales and Scotland and the views of those who may believe that Ireland should be united and not part of the United Kingdom. It is perfectly legitimate to hold such an opinion.
I hope that the order will not be passed, although I suspect that the payroll vote will ensure that it is. Instead, we should concentrate on the serious miscarriages of justice. I have mentioned the Guildford Four, who, thankfully, are now free. I also mentioned the Birmingham Six, who I hope will soon be free. There are many other people in British prisons because of the collection of confessional evidence, which is enshrined in the Act, such as those imprisoned after the Broadwater farm riots. Again, confessional evidence was used there. It is a serious step to enshrine that permanently in legislation and I hope that the House will not agree to that.

The Minister of State, Home Office (Mr. John Patten): I am glad to follow the hon. Member for Islington, North (Mr. Corbyn), who is the only Labour Back-Bench Member to get up and debate the issue, which I think is one of great importance. As I have told him before, I am aware of how seriously he takes these issues and I respect the way in which he deals with them—even though, as he knows, there is quite a gulf between our attitudes.
The hon. Gentleman made something of the position of the Birmingham Six. It is not for me to say whether he was in order to do so. The Birmingham Six were not arrested under the provisions of the Prevention of Terrorism (Temporary Provisions) Act. However, I can tell him that

my right hon. and learned Friend the Home Secretary and I are studying with great care papers put to the Home Office about that matter. My right hon. and learned Friend hopes to make an announcement as soon as he is in a position to do so.
I thank my hon. Friend the Member for Torbay (Mr. Allason) for his welcome for the order and for the congratulations that he extended to my right hon. and learned Friend. In many ways, however, the scene was set in the first speech by a Conservative Back Bencher, when my hon. Friend the Member for Wirral, South (Mr. Porter) clearly and precisely drove home the fact that we are talking about a preventive power. We are trying to prevent things from happening. It is all too easy to lose sight of the preventive element in the Act—a theme that I intend to develop.
It is often suggested that the exceptional powers provided by the Act are unnecessary because the ordinary criminal law should be adequate to deal with offences committed by terrorists. As I understand the Labour party's emerging new policy, its stance is that the ordinary criminal law is adequate to deal with terrorist offences. I do not think that it is. The Labour party's stance is not realistic. I agree with everyone, including the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley), that terrorists are common criminals. We are firm in our belief that, once they are brought to justice, there should be no special treatment for common criminals and no special status for self-styled terrorists or freedom fighters—a point rightly made by my hon. Friend the Member for Canterbury (Mr. Brazier).
I am sure that the substantial number of Unionist Members here this evening, who have first-hand experience of these matters—which I shared with them for two and a half years—agree that terrorist organisations present a special problem for the security forces, requiring a response which, alas, goes beyond the powers available in the normal criminal investigation of alleged offences or the prevention of outbreaks of criminal activity. In the case of terrorist organisations such as the IRA, their systematic ruthlessness, destructiveness and organisation are far in excess of those of organised crime anywhere else in the United Kingdom.
Irish Republican terrorists have staged a campaign in the United Kingdom over the past 20 years which is unparalleled elsewhere in western Europe. No other country in western Europe has put up with the things that we and those in the Province have had to endure over the past two decades. I do not accept that the persistence of the terrorist threat is a sign of the failure of the prevention of terrorism legislation. Without it, there would be still more victims and still more destruction, and fewer of those responsible would be brought to court. On that point, I think that the hon. Member for Fermanagh and South Tyrone (Mr. Maginnis)—I was about to call him my hon. Friend—and I are in complete agreement.
In our resistance to terrorism, we are rightly bound by the rule of law. The right hon. Member for Sparkbrook alluded to that, but it was only subjected to close examination by the hon. Member for Caithness and Sutherland (Mr. Maclennan) in his thoughtful and thought-provoking speech. We are bound by the rule of law and the principle of democratic accountability, to which the hon. Member for Caithness and Sutherland referred. But terrorists could not give anything for democratic accountability or the rule of law. I guess that


the Opposition have begun to forget that in their opposition to the prevention of terrorism legislation since 1982.
Terrorists have a disregard for the lives of others and for the democratically expressed wishes of the people in both communities in Northern Ireland and on this side of the water. It is a positive tragedy that we cannot rebuild bipartisan agreements between both sides of the House to attempt to defeat terrorism. There is obviously everything to be said for the official Opposition, ourselves and every party in the House seeking to rebuild the consensus which I guess exists tonight between the Conservative party and the Liberal Democratic party, and in many senses between us and the Ulster Unionists, my hon. Friend the Member for North Down (Mr. Kilfedder) and others.

Mr. Roger Sims: Does my hon. Friend agree that a number of Members of the Labour party men of honour—could not see their way to opposing the measure and will be conspicuous by their absence from the Division Lobbies?

Mr. Patten: My hon. Friend draws our attention to the importance of reading the Division lists tomorrow to see which hon. Members were not here to vote against the order.
I was asked specific questions by the right hon. Member for Spark brook. He said that the Act did not seem to prevent anything and he wanted hard evidence of successes. Sometimes, as in all crime prevention, it is hard to judge when legislation has prevented something from happening. That is common ground on both sides of the Chamber.
Let me give a recent example which was close to home in the Chamber. I hope that hon. Members on the Labour Front Bench are listening. Three people arrested in Wiltshire were held for seven days under the provisions of the Prevention of Terrorism Act. Those three people were later convicted of conspiracy to murder my right hon. Friend the Secretary of State for Defence when he was Secretary of State for Northern Ireland. They were sentenced to 25 years' imprisonment.
Is that not good enough for everyone on both sides of the House as an indication of the need for the Prevention of Terrorism Act? I dread to think what would have happened on that occasion had we not had the provisions of that Act.

Mr. Hattersley: The Minister of State may recall that the previous Home Secretary gave this example when we were debating these matters in a slightly calmer vein a year ago. Let me repeat a question that I put earlier tonight—not the one that he has not yet begun to answer. I shall put it to him in exactly the terms of his example. Last year the former Home Secretary told us that three men had been found in the grounds of the house belonging to the then Secretary of State for Northern Ireland. The three men were carrying offensive weapons and had no legitimate reason to be in those grounds. Is the Minister of State really asking what would have happened had the Prevention of Terrorism Act not existed? We know what would have happened. The three men would have been arrested, just as three men carrying firearms in any other grounds would have been arrested. The Prevention of Terrorism Act was not needed for that.

Mr. Patten: The right hon. Gentleman has just given an excellent example—[HON. MEMBERS: "Answer."] I am trying to do so.
I have just been advised by my right hon. and learned Friend the Attorney-General that an appeal is outstanding and that, therefore, the case is sub judice—[Interruption.] No. That is a reference to the situation in the past. I am advised by my right hon. and learned Friend that I cannot go further, any more than I could, in detail—[Interruption.]

Madam Deputy Speaker: Order.

Mr. Corbyn: On a point of order, Madam Deputy Speaker. The Attorney-General, through the Minster of State, has just informed us that an appeal on this matter is outstanding. Obviously, then, it is not in order for Ministers to speculate. As the case is sub judice, should not the Minister withdraw——

Madam Deputy Speaker: Order. The sub judice rule does not apply to legislation, and this is delegated legislation.

Mr. Patten: There are also other cases, to which my right hon. and learned Friend the Home Secretary referred in his opening speech—such as the Dyfed case and the Iranian arrests.

Mr. Barry Porter: Will my right hon. Friend give way?

Mr. Patten: I have very little time, but I shall give way.

Mr. Porter: If people had been convicted for carrying offensive weapons they would not, without the Prevention of Terrorism Act, have been given 25 years, even if I had been the judge.

Mr. Patten: I had better be guided by my right hon. and learned Friend the Attorney-General and refrain from discussing examples that might be seen as too close to home
Let me return to the second point of the right hon. Member for Sparkbrook. The fact that the police do not bring a charge does not invalidate the grounds on which a detention was made. The information may be too sensitive to bring before the court. This point was referred to by the hon. Member for Caithness and Sutherland. The powers are preventive, and they may frustrate terrorism.
Let us consider the cases that have arisen since the Brogan judgment—the incidents that we have had in Great Britain which, alas, have escaped the attentions of the ordinary forces of law and order, and have escaped the attentions of provisions of the Prevention of Terrorism Act. I refer to incidents such as the bomb at Turnhill barracks on 20 February 1989; the bomb at the Royal Marines school of music on 22 February; and the car bomb discovered and defused outside the home of the commander of the United Kingdom field army on 15 November 1989. The Opposition do not seem to treat this very seriously.
Then there were the car bomb that exploded at the married quarters in Colchester on 18 November 1989; the car bomb that exploded outside the Combined Services recruitment centre in Leicester on 20 February 1990, on which one Leicester Member, by his comments immediately afterwards, covered himself with such glory; and, most recently, the bomb that exploded at the Army recruiting office in Halifax on 25 February 1990. What a


litany that is. But, alas, the Labour party does not want powers to enable the forces of law and order to deal with a terrorist threat that is unique in western Europe.

Rev. Martin Smyth: Surely the argument that the Prevention of Terrorism Act should be scrapped because it has not been successful in every case is fallacious. The same argument could be applied to the criminal law, and that would put us all out of business.

Mr. Patten: I can add nothing to what the hon. Gentleman has said. He is entirely right but, for reasons that I cannot understand, that point is lost on Labour Front-Bench Members.

Mr. Hattersley: rose——

Mr. Patten: Will the right hon. Gentleman forgive me if I do not give way? [Interruption.] I have three more questions to answer in five minutes.
The right hon. Gentleman referred to the length of detention in this country under the PTA, as opposed to that in other countries. We have heard a good deal about seven days' detention without charge being draconian. In Belgium, detention by the police lasts for 24 hours, and is followed by indefinite detention without charges while investigations are carried out. In France, suspects can be detained for two years without charges. [Interruption.] I do not think that Labour Front-Bench Members like hearing the facts. In Italy the detention period is two years; in the Netherlands it is 106 days; in West Germany it is indefinite. Yet the Opposition insist on criticising our wish to allow detention for up to seven days to deal with the most serious terrorist threat in western Europe.
The right hon. Gentleman asked what was our justification for the exclusion order provision in the PTA. The power of exclusion is intended for those whom the Secretary of State is satisfied have been involved in some form of terrorist activity, but who cannot be prosecuted successfully—[Interruption.]Opposition—Members should listen before breaking out into uproar and outrage—because the evidence cannot be presented in court without endangering the sources of intelligence on which successful counter-intelligence depends. That point was made by the hon. Member for Caithness and Sutherland—but I suppose I have already praised the hon. Gentleman too much this evening; three tributes are too many for any speech.
Exclusion is a preventive measure, and one that the police firmly believe to be very useful in the fight against terrorism. They do not consider that any of the suggested alternatives would be effective.
I think it wise to listen to people who are much more experienced in the prevention of terrorism than I am, and we have cited a number of Conservatives with such experience; but why does not the right hon. Gentleman listen to what has been said by his noble Friend Lord Mason? I shall not quote what Lord Mason said in another place, but in an interview with the Sunday Times——

Mr. Barry Sheerman: When?

Mr. Patten: On 13 February 1988. May I ask the hon. Member for Huddersfield (Mr. Sheerman) to listen, rather than laughing and joking on the Front Bench? Lord Mason said of the Act:
There is no telling how many lives it has saved.
All that Lord Mason gets from Labour Front-Bench Members is derision. But he knows more about the prevention of terrorism than all the Labour Front-Bench Members put together. They understand nothing about it. Tonight they have shown themselves to be in total intellectual confusion about their position, unable to explain their change in 1982 and why they will not back the renewal order, which I commend to the House.

Question put:—

The House divided: Ayes 227, Noes 136.

Division No. 106]
[11.44 pm


AYES


Adley, Robert
Dover, Den


Aitken, Jonathan
Durant, Tony


Alison, Rt Hon Michael
Dykes, Hugh


Allason, Rupert
Eggar, Tim


Alton, David
Evans, David (Welwyn Hatf'd)


Amess, David
Fallon, Michael


Arbuthnot, James
Field, Barry (Isle of Wight)


Arnold, Jacques (Gravesham)
Forman, Nigel


Arnold, Tom (Hazel Grove)
Forsythe, Clifford (Antrim S)


Ashby, David
Fox, Sir Marcus


Atkins, Robert
Freeman, Roger


Atkinson, David
Garel-Jones, Tristan


Baker, Rt Hon K. (Mole Valley)
Glyn, Dr Sir Alan


Baker, Nicholas (Dorset N)
Goodhart, Sir Philip


Baldry, Tony
Goodlad, Alastair


Barnes, Mrs Rosie (Greenwich)
Gregory, Conal


Batiste, Spencer
Hamilton, Neil (Tatton)


Beggs, Roy
Hampson, Dr Keith


Bellingham, Henry
Hanley, Jeremy


Bennett, Nicholas (Pembroke)
Hannam, John


Benyon, W.
Hargreaves, A. (B'ham H'll Gr')


Bevan, David Gilroy
Hargreaves, Ken (Hyndburn)


Biffen, Rt Hon John
Harris, David


Blaker, Rt Hon Sir Peter
Haselhurst, Alan


Boscawen, Hon Robert
Hayes, Jerry


Boswell, Tim
Hayhoe, Rt Hon Sir Barney


Bottomley, Mrs Virginia
Hayward, Robert


Bowden, Gerald (Dulwich)
Heath, Rt Hon Edward


Bowis, John
Heathcoat-Amory, David


Boyson, Rt Hon Dr Sir Rhodes
Hind, Kenneth


Brandon-Bravo, Martin
Howell, Ralph (North Norfolk)


Brazier, Julian
Hughes, Robert G. (Harrow W)


Bright, Graham
Hunt, Sir John (Ravensbourne)


Brown, Michael (Brigg &amp; Cl't's)
Hunter, Andrew


Bruce, Ian (Dorset South)
Irvine, Michael


Bruce, Malcolm (Gordon)
Jack, Michael


Buck, Sir Antony
Jackson, Robert


Budgen, Nicholas
Janman, Tim


Butler, Chris
Jessel, Toby


Butterfill, John
Johnson Smith, Sir Geoffrey


Campbell, Menzies (Fife NE)
Jones, Gwilym (Cardiff N)


Carlisle, Kenneth (Lincoln)
Jones, Robert B (Herts W)


Carrington, Matthew
Jopling, Rt Hon Michael


Cartwright, John
Kennedy, Charles


Channon, Rt Hon Paul
Key, Robert


Chapman, Sydney
Kilfedder, James


Chope, Christopher
King, Roger (B'ham N'thfield)


Clark, Hon Alan (Plym'th S'n)
King, Rt Hon Tom (Bridgwater)


Coombs, Anthony (Wyre F'rest)
Kirkhope, Timothy


Coombs, Simon (Swindon)
Kirkwood, Archy


Cran, James
Knapman, Roger


Currie, Mrs Edwina
Knight, Greg (Derby North)


Davies, Q. (Stamf'd &amp; Spald'g)
Knowles, Michael


Davis, David (Boothferry)
Knox, David


Day, Stephen
Lang, Ian


Devlin, Tim
Latham, Michael


Dicks, Terry
Lawrence, Ivan


Dorrell, Stephen
Lennox-Boyd, Hon Mark


Douglas-Hamilton, Lord James
Lester, Jim (Broxtowe)






Lilley, Peter
Shaw, Sir Giles (Pudsey)


Lloyd, Peter (Fareham)
Shaw, Sir Michael (Scarb')


Lord, Michael
Shelton, Sir William


Lyell, Rt Hon Sir Nicholas
Shepherd, Colin (Hereford)


Macfarlane, Sir Neil
Shersby, Michael


Maclean, David
Sims, Roger


Maclennan, Robert
Skeet, Sir Trevor


McLoughlin, Patrick
Smith, Tim (Beaconsfield)


McNair-Wilson, Sir Michael
Smyth, Rev Martin (Belfast S)


McNair-Wilson, Sir Patrick
Speller, Tony


Maginnis, Ken
Spicer, Sir Jim (Dorset W)


Malins, Humtrey
Squire, Robin


Mans, Keith
Stanbrook, Ivor


Marland, Paul
Stanley, Rt Hon Sir John


Marlow, Tony
Steel, Rt Hon Sir David


Marshall, Michael (Arundel)
Stevens, Lewis


Maxwell-Hyslop, Robin
Stewart, Andy (Sherwood)


Mayhew, Rt Hon Sir Patrick
Stokes, Sir John


Michie, Mrs Ray (Arg'l &amp; Bute)
Stradling Thomas, Sir John


Miller, Sir Hal
Summerson, Hugo


Mills, Iain
Taylor, Ian (Esher)


Mitchell, Andrew (Gedling)
Taylor, Rt Hon J. D. (S'ford)


Mitchell, Sir David
Taylor, Matthew (Truro)


Moate, Roger
Tebbit, Rt Hon Norman


Molyneaux, Rt Hon James
Temple-Morris, Peter


Monro, Sir Hector
Thompson, D. (Calder Valley)


Morris, M (N'hampton S)
Thompson, Patrick (Norwich N)


Moss, Malcolm
Thurnham, Peter


Moynihan, Hon Colin
Townend, John (Bridlington)


Neale, Gerrard
Townsend, Cyril D. (B'heath)


Nelson, Anthony
Tredinnick, David


Neubert, Michael
Trippier, David


Newton, Rt Hon Tony
Trotter, Neville


Nicholls, Patrick
Twinn, Dr Ian


Nicholson, David (Taunton)
Waddington, Rt Hon David


Norris, Steve
Walden, George


Oppenheim, Phillip
Walker, A. Cecil (Belfast N)


Paice, James
Walker, Bill (T'side North)


Parkinson, Rt Hon Cecil
Waller, Gary


Patten, Rt Hon John
Ward, John


Pattie, Rt Hon Sir Geoffrey
Wardle, Charles (Bexhill)


Pawsey, James
Warren, Kenneth


Peacock, Mrs Elizabeth
Watts, John


Porter, Barry (Wirral S)
Wells, Bowen


Porter, David (Waveney)
Wheeler, Sir John


Portillo, Michael
Whitney, Ray


Powell, William (Corby)
Widdecombe, Ann


Price, Sir David
Wilkinson, John


Raison, Rt Hon Timothy
Winterton, Nicholas


Rathbone, Tim
Wolfson, Mark


Redwood, John
Wood, Timothy


Renton, Rt Hon Tim
Yeo, Tim


Roberts, Wyn (Conwy)



Ross, William (Londonderry E)
Tellers for the Ayes:


Rowe, Andrew
Mr. John M. Taylor and


Ryder, Richard
 Mr. Irvine Patnick.


Sackville, Hon Tom





NOES


Abbott, Ms Diane
Callaghan, Jim


Allen, Graham
Canavan, Dennis


Anderson, Donald
Clarke, Tom (Monklands W)


Archer, Rt Hon Peter
Clay, Bob


Armstrong, Hilary
Clelland, David


Ashton, Joe
Cohen, Harry


Banks, Tony (Newham NW)
Cook, Robin (Livingston)


Barnes, Harry (Derbyshire NE)
Corbett, Robin


Barron, Kevin
Corbyn, Jeremy


Battle, John
Cousins, Jim


Beckett, Margaret
Cox, Tom


Benn, Rt Hon Tony
Crowther, Stan


Bennett, A. F. (D'nt'n &amp; R'dish)
Cryer, Bob


Bermingham, Gerald
Dalyell, Tam


Blair, Tony
Darling, Alistair


Boyes, Roland
Davis, Terry (B'ham Hodge H'l)


Brown, Gordon (D'mline E)
Dixon, Don


Brown, Nicholas (Newcastle E)
Dobson, Frank


Brown, Ron (Edinburgh Leith)
Duffy, A. E. P.


Buckley, George J.
Dunnachie, Jimmy


Caborn, Richard
Eastham, Ken





Fields, Terry (L'pool B G'n)
Martin, Michael J. (Springburn)


Fisher, Mark
Maxton, John


Flannery, Martin
Meale, Alan


Flynn, Paul
Michael, Alun


Foster, Derek
Michie, Bill (Sheffield Heeley)


Foulkes, George
Moonie, Dr Lewis


Fraser, John
Morgan, Rhodri


Fyfe, Maria
Morley, Elliot


Galloway, George
Mowlam, Marjorie


Godman, Dr Norman A.
Mullin, Chris


Golding, Mrs Llin
Murphy, Paul


Graham, Thomas
Nellist, Dave


Grant, Bernie (Tottenham)
O'Brien, William


Griffiths, Nigel (Edinburgh S)
O'Neill, Martin


Griffiths, Win (Bridgend)
Patchett, Terry


Harman, Ms Harriet
Pike, Peter L.


Hattersley, Rt Hon Roy
Prescott, John


Heffer, Eric S.
Primarolo, Dawn


Henderson, Doug
Quin, Ms Joyce


Hinchliffe, David
Randall, Stuart


Hood, Jimmy
Robertson, George


Howarth, George (Knowsley N)
Rogers, Allan


Hughes, John (Coventry NE)
Rowlands, Ted


Hughes, Robert (Aberdeen N)
Sedgemore, Brian


Illsley, Eric
Sheerman, Barry


Ingram, Adam
Short, Clare


Jones, Barry (Alyn &amp; Deeside)
Skinner, Dennis


Jones, Martyn (Clwyd S W)
Smith, Andrew (Oxford E)


Kaufman, Rt Hon Gerald
Smith, C. (Isl'ton &amp; F'bury)


Lambie, David
Smith, J. P. (Vale of Glam)


Lamond, James
Soley, Clive


Leadbitter, Ted
Spearing, Nigel


Leighton, Ron
Steinberg, Gerry


Lestor, Joan (Eccles)
Stott, Roger


Livingstone, Ken
Taylor, Mrs Ann (Dewsbury)


Lloyd, Tony (Stretford)
Turner, Dennis


Lofthouse, Geoffrey
Walley, Joan


Loyden, Eddie
Wareing, Robert N.


McAllion, John
Watson, Mike (Glasgow, C)


McAvoy, Thomas
Welsh, Michael (Doncaster N)


McFall, John
Williams, Alan W. (Carm'then)


McKay, Allen (Barnsley West)
Winnick, David


McLeish, Henry
Wise, Mrs Audrey


McNamara, Kevin
Worthington, Tony


McWilliam, John
Young, David (Bolton SE)


Madden, Max



Mahon, Mrs Alice
Tellers for the Noes:


Marshall, David (Shettleston)
Mr. Frank Haynes and


Marshall, Jim (Leicester S)
Mr. Ray Powell.

Question accordingly agreed to.

Resolved,
That the draft Prevention of Terrorism (Temporary Provisions) Act 1989 (Continuance) Order 1990, which was laid before this House on 19th February, he approved.

SCOTTISH GRAND COMMITTEE

Ordered,
That, in the course of its consideration of the Matter of Scottish Local Government Finance, the Scottish Grand Committee may meet in Edinburgh on Monday 19th March at half-past Ten o'clock—[Mr. Greg Knight.]

BUSINESS OF THE HOUSE

Ordered,
That, at the sitting on Wednesday 7th March, if proceedings on the Motions in the name of Sir Geoffrey Howe relating to Members' Interests have not previously been disposed of, Mr. Speaker shall at Ten o'clock—

(1) in relation to the Motion then under considera-tion—

(a) if the Question last proposed from the Chair is the Main Question, call a Member to move any amendments thereto which he may have selected, and the Questions thereon shall be put forthwith, and then put the Main Question or the Main Question as amended; or


(b) if the Question last proposed from the Chair is for the amendment of the Motion, put that Question and then proceed as aforesaid; and
(2) in relation to any further such Motions as may then be made, put forthwith any questions necessary to dispose of proceedings thereon, including the Questions on any amendments thereto which he may have selected and which may then be moved.—[Mr. Greg Knight.]

Blood Transfusions (HIV Infection)

Motion made, and Question proposed, That this House do now adjourn—[Mr. Greg Knight.]

Mr. Robin Cook: I speak to this Adjournment from the Back Benches partly to signal that I regard this as a non-party political issue for which there is considerable cross-party feeling. I do so also because, on this occasion, I speak as a constituency Member. It is unusual for a member of the shadow Cabinet to retire to the Back Benches willingly, and it requires unusual circumstances to persuade me to do so. On this occasion, there are unusual circumstances, which I have observed at first hand and have left me with a strong feeling that an injustice is being done.
I represent two constituents who are both HIV-infected as a result of blood transfusions in the Health Service. Neither is a haemophiliac—that is a relevant and important point which I will develop later. I suspect that my case is unique because there are only 19 such patients alive in Britain. I know that my hon. Friend the Member for Birmingham, Ladywood (Ms. Short), who will intervene in the debate with my permission, has one other case in her constituency.
The facts are quickly rehearsed, and I do not think that they are in dispute. As the Secretary of State said in his letter of 12 February, 32 such cases are known to have occurred from transfusions that took place in Britain. Of those 32, 13 have since died. Those figures give rise to two observations relevant to my case.
First, we are dealing with a small number. It is probable that there are still some in our community who have not yet been diagnosed, although they may have been infected from blood transfusion before 1985. It is equally probable that there will be few of them. Even if there were as many again as are at present alive and diagnosed, we are talking about a total throughout Britain of some 50 people.
Secondly, not only is that number small, but it is not getting any larger. There is no known case of a patient who has been infected with HIV as a result of blood transfusion since 1985. So we can tackle the public policy questions that arise from this group confident that they are few and that they are not getting larger.
The key issue of public policy to which I wish to address the mind of the House tonight, is the discrimination against this handful who are excluded from the special financial support that the Government have created for those haemophiliacs who are HIV-infected through blood products.
It is no part of my purpose tonight to debate those arrangements. I shall content myself with two brief observations. First, I welcome the fact that Ministers have created those special arrangements and, secondly, for balance, I express no view tonight on whether those arrangements are adequate or inadequate. But whichever view is taken on how adequate are the arrangements that have been made for haemophiliacs, the purpose of my Adjournment debate tonight is to query how on earth the Government can justify excluding from those arrangements this small handful of people who have also been infected as a result of treatment within the NHS but who happen not to be haemophiliacs.
As the Minister will be aware, as I have no doubt that he has seen the file, I have had correspondence over two


years with two successive Secretaries of State on this issue. I have repeatedly asked how they can justify leaving that tiny group of infected patients out in the cold. The attempts in the replies that I have received to make a logical defence of the arrangement are so threadbare that they have a hint of desperation. They have not convinced me, and I am authorised to say that they have not convinced the hon. Member for Eastleigh (Sir D. Price), who was offered the same explanation in a parliamentary answer last month.
Briefly, three grounds are advanced by the Government for justifying the exclusion of those who are infected but are not haemophiliacs. First, they say that haemophiliacs were already disabled at the time of infection. All those people who have become infected through whole blood transfusion were so infected as a result of undergoing treatment within the NHS. By definition, at the time of that treatment they may well have been less fit than many haemophiliacs.
I put it to the Minister that the defence that is being arranged by the NHS throughout Britain against legal action being taken by those people is that, at the time of the transfusion, they were in a life-threatening condition and the risk from transfusion was substantially less than the probability of death without transfusion. In those circumstances, it is difficult now to tell those people that they should be excluded from the special arrangements because they were not disabled at the time of infection.
Secondly, it is argued that haemophiliacs were already financially disadvantaged by their condition and were barred from taking out life insurance. The relative financial security of the patients with whom we are concerned varies from circumstance to circumstance and from individual to individual. I would be interested to hear from the Minister whether any data have been collected by or are available to the Department to suggest that the financial background of haemophiliacs is worse than the financial circumstances of the small group whom we are debating tonight.
One of my constituents, whose financial circumstances I know in detail, was a single parent who for many years lived on benefit and had been on social security for some time before she became infected through blood transfusion. She very reasonably made the point to me that, when one is living on the extremely tight budget of social security for many years, the very last priority one is likely to have is paying the premiums on a life insurance policy. She has always been in financial difficulty and now has to subsist on £26 a week disablement benefit, quite unable to supplement that from earnings because it is now increasingly rare for her to be able to leave the house, far less obtain employment.
The third justification advanced by Ministers as to why the scheme should be confined to haemophiliacs is that haemophilia is hereditary, so more than one person may be infected in a family. That undoubtedly is the case, but it has rightly not stopped Ministers making payment to those families in which there is only one infected member. They make up the great majority of cases where payment has been made.
Not only is haemophilia hereditary—so is HIV infection. If there is no example of two such infected cases in the households of the small handful of people that we are discussing tonight, it is entirely fortuitous, and it does not exclude the possibility that such a case may be discovered in the future. We know that one patient was

infected by a whole blood transfusion while giving birth, and in those circumstances it is as much a matter of luck as of anything else that there are not two infected people in that household.
The more one contemplates the cases of those who are haemophiliac and those who are not, the more difficult it becomes to see the basis for the distinction. Indeed, it becomes more obvious that there are greater similarities between the two groups than there are differences. The most obvious similarity is the financial pressure. Both groups face the same extra expenses for being HIV-infected. Both groups have a reduced opportunity to earn as a result of the infection, and both may be unable to discharge family responsibilities. In those circumstances, it is natural to find that many haemophiliacs strongly support the case of those who are infected as a result of NHS blood transfusions, although they are not haemophiliacs.
I understand that those who administer the Macfarlane Trust, funded by the Government to assist cases of hardship among haemophiliacs, would be willing to consider extending the trust to include those who are not haemophiliacs but who are infected through NI-IS treatment, provided that the Government also act to widen the terms of reference of the trust and to provide the additional modest amounts of money necessary to meet that additional responsibility.
Money cannot be the reason why the Government resist the case, because it is a very modest sum. The Government have already provided £34 million for special arrangements for ex gratia payments to those haemophiliacs who have been infected. The sum of money required to meet all the cases that we are discussing tonight would be less than an additional £1 million.
The real reason why the Government resist extension of the scheme is not revealed in the letters or the parliamentary answers on the matter. However, I have glimpsed in conversations with Ministers that the real reason that they are reluctant to extend the scheme to embrace those people who are not haemophiliac is the stark terror of their advisers at the precedent that such a payment would cause for other NHS patients.
I understand that a genuine problem exists, and I appreciate that a condition of the special scheme for haemophiliacs was that it was capable of being ring-fenced so as to protect the Department of Health against other patients who might make parallel claims on the back of that precedent. The problem is that the ring fence, important though it is, has been drawn in the wrong place. It should have included and not excluded those other patients who are HIV-infected as a result of blood transfusions.
I suggest to the Minister and to his advisers that, if they amend that obvious weakness in the ring fence, they will have a much more logical case to defend and it will be much easier for them to protect the integrity of the ring fence. I understand that in Canada, where they have adopted similar ex gratia payments for people infected through treatment within the health service, they have not made any distinction between those who are haemophiliac and those who are not, for precisely that reason.
In one respect, there is a distinction between the two groups. In talking to a constituent who has been to see me about her own problems, what came across most strongly was her sense of isolation. Because she does not belong to one of the normal risk groups, there is no support group


with whom she can readily identify. I recently forwarded to the Secretary of State a letter from her which spelled out that sense of isolation. She asked why she was any different from any of the haemophiliacs.
I leave that question with the Minister. I know that he is an honest man and that he has a clear mind. He must be troubled to know that he can advance with a good face no logical reason for excluding this group of people from ex gratia payments that are already available to a much larger group.
I hope that the hon. Gentleman will be able to respond positively to the debate. If he cannot do so, I beg him at least not to dig himself further into the morass of logical inconsistencies by trying to defend the present position. I ask him to return to his Department and to say to his advisers, "You do not have to go out there and defend the present position. We cannot hold this line any longer. Let's get rid of this piece of petty discrimination, which is as much nonsense in logic as it is unjust in equity." Were he to convey that message to his advisers in his Department, I assure him that he would be speaking for almost all hon. Members.

Ms. Clare Short: I am grateful to my hon. Friend the Member for Livingston (Mr. Cook) for allowing me to speak in the debate.
I had a constituent who was in this position. She died just before Christmas. She was a lone parent—the mother of four children. I got to know her and the children extremely well during the time that she was ill. I have written to the Department of Health. I met the previous Secretary of State and got nowhere. I confirm what my hon. Friend said: that the reason is terror of future infection through needles, or whatever, not concern about justice for this small group of people.
My constituent, whose life was taken from her by the National Health Service through a blood transfusion, lived out her remaining years in poverty. She was unable to afford the kind of food that would have made the quality of her life better. She was unable to give her children the kind of treats that she wished to give them. It is insufferable that she was treated in that way by the Government and the country. It is insufferable, too, that her children have been left with absolutely nothing. She died in poverty and left nothing to them.
The Government will say that there is the possibility of legal action and compensation. If that ever comes to anything, it will be too late for my constituent. It may help her children, but she is dead. The quality of her life was massively diminished because she lived her remaining years in poverty. That is not good enough. I appeal to the Minister to do better than that for other people who are in the same position.

The Parliamentary Under-Secretary of State for Health (Mr. Roger Freeman): I am sure that I speak for the whole House in extending heartfelt sympathy to all those who have suffered by contracting HIV and AIDS through blood transfusions—not necessarily whole blood transfusions; in some cases it has been through partial blood

transfusion. Those comments are not trite; they are deeply felt and I am sure that all hon. Members, certainly on this side of the House, feel exactly the same.
The hon. Members for Birmingham, Ladywood (Ms. Short) and for Livingston (Mr. Cook) eloquently expressed their views. The hon. Member for Livingston has campaigned long and consistently for the inclusion of the group that he has described within the provisions that have been made for haemophiliacs. I know that I shall not convince him tonight of the Government's position. His campaign will continue.
I am a great believer in debate being a process of discovery. All sides learn something from parliamentary debate. I do not relish ever being put in an invidious position by having to place too much reliance on logic, thus excluding ex gratia payments to a certain group of individuals when such payments have been made to other groups.
The position was set out by my right hon. Friend the Member for Braintree (Mr. Newton) when he was Minister of State for Health, by my right hon. Friend the Member for Croydon, Central (Mr. Moore) when he was Secretary of State for Social Services and, most recently, by my right hon. and learned Friend the Secretary of State for Health. That was during the period from 1987 to 1990. The hon. Gentleman was right to raise the issue. It always deserves careful attention. I do not believe that additional payments to haemophiliacs—a second payment from the Macfarlane Trust—necessarily change the position, but they prod careful thought again about their predicament. It is tragic that a number of people have HIV infection as a result of receiving blood transfusions, and that some have developed AIDS and have died.
HIV was identified in 1984 and since 1985 we have screened blood in the United Kingdom. We all have great sympathy, of course, for those people and their families—indeed, for all people who have HIV and AIDS. It is estimated that 113 people in the United Kingdom have been infected with HIV through blood transfusions. Of those, 17 were transfused, we know, in the United Kingdom, 35 were transfused abroad, and for the remaining 61 the place of transfusion is unknown. According to a completely different source of statistics, including some overlap, the numbers of reported AIDS cases among transfusion recipients are 21 transfused in the United Kingdom, of whom 15 have died, and 26 transfused elsewhere, of whom 17 have died. It may be that some of the deaths are attributable to the patient's original illness and not to AIDS.
Fortunately, as medical and scientific knowledge about the screening of donors and testing donations has increased, the risks of HIV being acquired from blood transfusion in this country have been reduced considerably, I understand that the risk is now very remote indeed—about one in 1 million. However, we should not pretend that we shall ever get to a stage at which there is no risk from medical procedures.
The hon. Gentleman referred to haemophiliacs. The Government and the whole House acknowledge the tragedy of those who received infected blood products prior to 1985. Some 1,200 haemophiliacs were affected. I hope that the hon. Gentleman agrees with me that there is no doubt that, to an extent, haemophiliacs suffered a double tragedy. They had a disadvantage—there is no denying that—before the accidents occurred. The establishment of the first and second Macfarlane Trusts


acknowledged the tragedy of this group. Both, of course, were ex gratia payments: they were not compensation payments in the strict sense of the term. They were not in lieu of the legal right to sue. Indeed, that right remains.
The Department of Health maintains that there was no negligence. One is not denying the consequences, but I stress again that the Department of Health believed that it was offering the best available treatment, in good faith, at the time. Tragically, we know now that, before 1985, the consequences were not what was desired.
I presume that, although he did not say so, the hon. Member for Livingston would naturally extend his argument about blood transfussions to whether the transfusion occurred in the United Kingdom or abroad. It is interesting to note that the majority of cases in which we know where the transfusion occurred were abroad. Secondly, he would presumably extend his argument to all those who are living here. Thirdly, he would extend the provision without relying on exhaustive proof of the cause of HIV—it is very difficult to prove; and he would also extend his argument without seeking to ascertain whether the death would have occurred anyway—again, something that is very difficult to prove.
So one assumes that the group to which the hon. Gentleman is referring is a comprehensive one. I do not think that the hon. Gentleman would seek to subdivide that group in—to use his own expression—any logical way, so I think that one must cast doubt on an estimate of £1 million. I do not seek this evening to debate the cost of any settlement in relation to this group; I simply put it to the hon. Gentleman that, even among those who have suffered through transfusion, it is very difficult to divide and subdivide, using his criteria, into categories which are or are not deserving.
I believe that it is very difficult for the hon. Gentleman honestly and logically to find any resting place in his argument. In terms of what he is essentially arguing for—his universal no-fault scheme, whether there is negligence or not, for medical accidents—I do not believe that there is any comfortable resting place for the hon. Gentleman. I put four examples to him. There are clearly cases that fall into the category of those who acquired HIV through skin grafts or organ transplants; the tragic cases of those who suffer serious side effects from the treatment of leukaemia; those who suffer brain damage as a result of anaesthesia during operations; and those who suffer post-operative complications having undergone neurosurgery. I could go through a long list of categories for which other Members of Parliament would argue lucidly that there was real disadvantage and financial hardship as a result of an accident whether or not there was negligence.
Although he has argued his case very coherently, in his heart of hearts I am sure that the hon. Gentleman would not wish to draw a hard and fast line and say that we are dealing only with one particular group of individuals. If he were standing at this Dispatch Box, he would then be faced with exactly the same arguments from other hon. Members, arguing just as eloquently, to extend to the final resting place the argument he has put tonight, which is that there should be a universal no-fault scheme, whatever the cause and whether or not there was negligence.
I have looked at the vaccine damage compensation scheme again, anticipating that the hon. Gentleman might raise it—and he would have been right to do so. That scheme, which provides automatic payment for those families whose children have suffered as a result of vaccine

damage, is justifiable because it is clearly in the public interest that all children should be vaccinated, and the small but significant risk is a price that society and the taxpayer should bear to ensure proper compliance with and acceptance of our vaccination programmes.
The argument for no-fault compensation with a preserved right to sue—I understand that some days ago in a Committee in the House the Member for Ladywood argued the case for no-fault compensation with the right to sue—would have the benefit of some automatic payment to relieve financial pressures. I strongly believe that that system, which is the only logical resting place for the hon. Gentleman's argument, would lead to a low, complicated and bureaucratic tariff, which would prove an impediment or discouragement to suit.
In cases of admitted negligence—such as in radiotherapy where, sadly, there have been some examples in recent years—the better system is one of interim payments by the health authority concerned, with the prospect of an ultimate out-of-court settlement or settlement in court. That would be a fairer and more flexible solution.
In cases of no or disputed negligence, as in this case, we have to rely on our free National Health Service and our social security system for support, with the right of any affected party to sue. That is a generous system and I hope, as I am sure do all right hon. and hon. Members, that there will soon be an effective treatment for HIV and for AIDS.

Mr. Robin Cook: First, the difficulty of relying on the courts as a means of recompense and compensation is that the time scale of the courts is wholly out of synchronisation with the time scale available to many sufferers—13 out of 32 people have already died. Secondly, although I am tempted to follow the Minister's argument about no-fault compensation, let me remind him that the Government, in their wisdom, have provided a scheme for haemophiliacs who are infected through blood products in the NHS. The point of the debate is not whether there should be a no-fault compensation scheme for all those who suffer cryogenic diseases or injury at the hands of NHS, but about how, having created such a scheme, the Government can exclude from it those small additional numbers.

Mr. Freeman: I accept that time is short for many who have HIV, although there is not necessarily a death sentence hanging over them. That is not disputed; indeed, it is one of the pressing arguments in favour of compensating the haemophiliacs who have become infected. It is a difficult issue, as one is asked to extend on behalf of the taxpayer an act of relative generosity and charity to one group of sufferers to another group, however logically the hon. Gentleman may group them by cause—and the common cause is blood transfusion.
The hon. Gentleman will concede that there is no hiding place for a Minister in terms of drawing a particular line if he were to move the line case by case beyond where it has already been drawn to relieve the financial pressures on a group which has suffered double jeopardy—double disadvantage, as it were. There is no logical resting place until we have a relatively generous, universal no-fault compensation scheme, and I do not believe that that would be in the best interests of the National Health Service.
I genuinely meant what I said at the outset: I do not believe that these debates are merely a pro forma exercise to enable an hon. Member to raise a constituency matter


for the benefit of the media. There is a process of discovery in all these debates, because thought goes into their preparation and answer. I shall study the Official Report of the debate and bring the matter to the attention of Ministers at the Department of Health. It is only fair that I should do that, the hon. Gentleman having asked me to do so.
I cannot give him the assurance for which he asked, and he would not expect me to do so, but I join him again in expressing sympathy to those who have suffered. They have the sympathy of the Government. We shall reflect, as

I said at the outset, on what the hon. Gentleman said. I can give absolutely no commitments, and I would not wish him to convey to his constituents or any others in this difficult position that the Government are about to rethink their already clearly declared position.
However, it would be wrong of me to slam the door in the hon. Gentleman's face and say that there is absolutely no prospect of any hope in future for this category of individuals. Of course we will reflect and listen carefully to the arguments, and I have set out as clearly and sympathetically as I can the Government's position.

Question put and agreed to.

Adjourned accordingly at twenty-six minutes past Twelve o'clock.